As wealth builder preparing for FI, FIRE, FIRe or full retirement; do you prefer to build up your wealth based on :
( 1) resilient net worth providing cash flow over future market and economic cycles
or
(2) large resilient investment portfolio providing dividend income over future market and economic cycles.
Both methods should also aim to avoid sequence-of-returns risk to build sustainable retirement income for life!
Uncle8888 observes that most investment bloggers are on method (2) camp. Right?
Which method has better chance to avoid sequence-of-returns risk?
(1) or (2)
Uncle8888 is on (1)
:-)
Posts
Sequence of returns risk is if suay suay need to withdraw from declining volatile capital in the first 3-5 years of retirement (i.e. no more active income to patch back capital).
ReplyDeleteIf can just depend on dividends & interest (especially in first 5 years of retirement) then bad sequence of returns risk can be overcome. ;)