What Bad Returns at the Wrong Time Can Mean for College
The order in which returns unfold over time can either help or hurt.
A version of this article originally appeared on Oct. 5, 2020.
I’ve written a couple of articles about how sequence-of-returns risk can affect portfolio values both for retirees making portfolio withdrawals and younger investors who are putting money away for the future. The order in which returns unfold over time is important because it can affect the dollar value of a portfolio that has cash flows from contributions or withdrawals. In a nutshell, the periods when more dollars are invested will carry more weight in your overall results.