Sequence of Returns . Card 1

RupeeCase

Education . Sequence risk . 1 of 3

A late night text about a market dip

Same ten years. Same average.
One ends at 28 lakh. One at 140 lakh.

Take a decade of returns that averages 9.6 pct. A retiree drawing the same income every year lands five times apart depending only on the order those years arrive in.

Average return

9.6 pct

Identical either way. The number you were sold.

Bad years first

28 lakh

Retiree drawing 8 pct a year. Nearly run down.

Good years first

140 lakh

Same ten years reshuffled. More than they started.

The part the CAGR never shows you

The average return is a brochure number. The order is the one you actually live through.