Sequence risk doesn't matter as much when working and building a portfolio as it does when you start to take money out of your investments during retirement. When adding money, it is called dollar-cost averaging and there is always the risk that stocks will continue to go up. Then the positive sequence of returns may not be as beneficial as compared to a lump-sum investment. If you have the money and the choice, this sequence risk is something to consider.
When withdrawing money, a negative sequence of returns may damage your portfolio value as you take money from a smaller pool of funds (think: a bear market like late 2007- early 2009). Minimize this risk by having "some" years of your retirement income needs in safe money (money markets, CD's) to last 2-5 years, so market risk investments don't need to be touched.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.