Sequence of returns matters
The HinduIt is normal to be concerned about the risk of negative returns on equity investments. So, the best sequence of returns is losses at the beginning of investment period and gains towards the end of the time horizon for a life goal. But you are exposed to the risk that your portfolio experiences positive returns during the initial period of the investment and negative returns towards the end of the time horizon for a life goal. A portfolio that makes an initial investment without subsequent contribution or withdrawal during the investment period does not suffer from SORR; the sequence in which a 10% loss and a 10% gain occurs is irrelevant, as the end portfolio value will be the same in both scenarios. Conclusion The optimal way to moderate SORR is to reduce your equity investment as you approach the last five years of the time horizon for a life goal.
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The longer one stays invested in equity market, better the returns derived from it
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