What is the sequential risk?

The

risk of sequence concerns the risk of a financial portfolio if the portfolio owner maintains it with a regular selection. This generally occurs in people who are retired and need cash flow from their portfolios as a means to cover life spending when they can no longer work. If the portfolio suffers a number of negative events at a time when selections are necessary, it may be particularly harmful and may require smaller selections in the future. In order for people to control the sequential risk, people must try to balance the peace that withdrawals with a number of risk surrounding the portfolio as a whole.

Many people have set up their investment portfolios with the intention of income after they have achieved an age that no longer allows them to work. In this way, they can still receive cash flows to cover their cost of living. Ideally, these people would get a steady flow of cash at regular intervals, but this process can be interrupted by Trhásalval. For this reason, investors must consider the risk withequation to avoid potential financial calamity in retirement years.

As an example of how sequential risk works, imagine two different pensioners. Both of them have exactly the same amount of money in their portfolios at the time of their retirement, but they leave at different times. The first person begins to take selections at a time when the stock market begins a long upward increase. On the other hand, the second person's retirement withdrawals are starting properly as the market begins to plunge. Although both investors have retired even the position, the first person is in a much better financial form than in the second.

Although the revenue rate for portfolios usually exports for a certain period of time, the period of market negativity may be harmful if they occur in time selections. Investors must be the same as this phenomenon because they consider the risk of sequence. Those who ignore it and plan to remove the same amount of money in kaObser selection, money can suddenly run.

Although it may be impossible to completely eliminate the risk of sequence, investors can take steps to relieve its damage. By studying the market and knowing when the entry into the volatility may be, investors can adapt their selections to make sure they are not too exposed. In addition, investors might want to set up their selections on a certain percentage of their total portfolios instead of blocking each other to the set amount. This can correct the risks of leaving the portfolio briefly on the funds when it hits economic turbulence.

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