Bella, thank you so much for calling in with that question. What you are essentially asking about is something called sequence of returns risk. A drop in your portfolio at the beginning of your retirement can be worse than one 15 or 20 years later. In order to manage that risk, what many retiries do is d risk and then re risk. It sounds counter intuitive because we often think of time line and risk as having a linear relationship. As time line shortens, risk should also shorten.
#399: Bella is SO CLOSE to reaching F.I.R.E and is worried about her withdrawal rate if the stock market drops. If the stock market does drop, can she withdraw as much as she had originally planned?
Sam has been investing for several decades and thinks that he should stay invested in his portfolio, despite the recent drop in value…but he is still wondering if there’s a chance that he should sell.
Meisha is making more money at her new job but can’t contribute to her 401(k) for the first six months - what should she do with her extra money in this interim??
Kyria is a young investor with multiple goals: she’s wondering how to best save for a downpayment without it being eroded by inflation and also whether her investment choices should take on more risk, since time is on her side.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
For more information, visit the show notes at https://affordanything.com/episode399
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