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Sequence of Returns - Friend or Foe?
Save via sponsored retirement plans until you're 65 and then take out 4% a year! That is the standard advice we see everywhere these days. In theory, if the base of capital were static (i.e. not volatile), that work. However, the "savings" instruments used in these plans are actually investment vehicles such as stocks and bonds, and as such, they are not static, and can be quite volatile.
As it turns out, the amount that can be taken out each year is drastically affected by the movement of those underlying investments, and the order in which those returns is sequenced, can drastically alter the outcome of a financial plan.
"When government creates a problem (read onerous taxation) and then turns around and creates an exception to the problem they created (read tax sheltered retirement plans, etc.) aren't you just a little bit suspicious that you are being manipulated?" -R. Nelson Nash, Becoming Your Own Banker, Unlock the Infinite Banking Concept.
Connect with Doug MacKenze:
Website: Control Capital Solutions
Email: [email protected]
Connect with john Fox Ward:
Website: Nash Cashflow - The Nash CashFlow Group
Email: [email protected]
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Save via sponsored retirement plans until you're 65 and then take out 4% a year! That is the standard advice we see everywhere these days. In theory, if the base of capital were static (i.e. not volatile), that work. However, the "savings" instruments used in these plans are actually investment vehicles such as stocks and bonds, and as such, they are not static, and can be quite volatile.
As it turns out, the amount that can be taken out each year is drastically affected by the movement of those underlying investments, and the order in which those returns is sequenced, can drastically alter the outcome of a financial plan.
"When government creates a problem (read onerous taxation) and then turns around and creates an exception to the problem they created (read tax sheltered retirement plans, etc.) aren't you just a little bit suspicious that you are being manipulated?" -R. Nelson Nash, Becoming Your Own Banker, Unlock the Infinite Banking Concept.
Connect with Doug MacKenze:
Website: Control Capital Solutions
Email: [email protected]
Connect with john Fox Ward:
Website: Nash Cashflow - The Nash CashFlow Group
Email: [email protected]