Introduction to Time and Risk
A long time frame can be the key to managing the effects of volatility.
What you will learn
- Reduction of Risk over Time
- Potential to Reduce Risk or Increase Return
- Diversified Portfolios in Various Market Conditions
- Potential Shortfall: The Risk of High Withdrawal Rates
Introduction to Time and Risk
Risk can be distressing enough without having to suffer its effects over many, many years. This is why diversification is so valuable, as it can smooth out the effects of risk over years. As shown in the charts in this tutorial, volatility can decrease over a long time frame, most notably with stocks. The tutorial also looks at the effects of different withdrawal rates on a portfolio.
