I regularly write columns for MoneyControl. The latest one I wrote was about highlighting the difference between Retiring in Bull Market Vs Retiring in Bear Market.
You will be surprised how things can change suddenly for people who retire in different markets. And the article uses basic maths (and nothing complex) to show that.
Many would agree and many aggressive ones won’t. But it wouldn’t be wrong to say that It’s always better to be conservative in the years closer to your retirement. So without any delay, here is the link to the post (which takes you to the article):
Retiring in Bull Market Vs Retiring in Bear Market
And to highlight why this derisking is important for all goals and not just for retirement, I suggest you have a look at this short video as well. But first, read the article. Only then see this video:
In the context of the article, the bicycle rider was very close to the finishing line and about to win it easily. But he took the unnecessary risk of taking his hands off the handle to celebrate prematurely. (Do watch the video again to get the right perspective).
Now the same happened with the aggressive retiree:
- He was very close to his goal of retirement (just a few years away)
- He didn’t need to take any risk (all he needed was a very small rate of return)
- But he took a lot of unnecessary risks (put most of the money in high-risk equity when it was not required at all)
- And he, unfortunately, ended up with poor returns in the last 5 years and eroded his retirement portfolio.
Ideally, retirement planning should be always looked at in the perspective of the overall financial planning as you cannot just focus on one goal. You are human and you have many financial goals. Right?
Hope you find the article and the video interesting.