Yes, that makes sense mathematically, but few people are able to live like this. A typical person will be disheartened to have 50% of what they thought 10 years ago they would have, even if it's 100K higher than what they thought 20 years ago they would have (which means that they are net ahead). However, I've seen the arguments (in groups in Hebrew, so won't share), that, rationally, the safer part of a portfolio should be set in terms of absolute sums, not percentages, due to reasoning like yours here.returns in equity heavy portfolios will offset even the worst sequence of returns risk. Even with the risk of a 50% drawdown an equity heavy (or all equity) portfolio outperforms over the course of a retirement to such an extent that you don't end worse off than a 60/40 portfolio. If you don't happen to retire in the middle of a global financial crisis you end up dramatically ahead.
Statistics: Posted by monkeytoad — Sat Sep 14, 2024 1:58 am — Replies 97 — Views 4829