Reduce equity investments near financial goal

thehindu.com

Sequence of returns risk (SORR) affects investors differently based on their stage in life. A market decline impacts portfolios more significantly as retirement approaches, due to larger equity investments. To mitigate SORR, it is recommended to reduce equity investments in the last five years before reaching a financial goal. This strategy helps protect against potential losses during retirement. Retirees face SORR as they withdraw funds from their portfolios. Shifting at least 10% of equity investments to safer options, like bank deposits, is advised to minimize risk.


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