Have you locked your investments with little flexibility to do more?

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For investors aiming to grow their assets, having a balanced allocation of stocks, bonds and alternative assets, including a good amount of growth-oriented assets is crucial.

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At higher rates of withdrawal, the risk of depleting the portfolio prematurely increases significantly. For example, if a retiree withdraws at a higher rate, say at 8%, they may initially have a more comfortable standard of living. However, this comfort could be short-lived if the market experiences a downturn, or if inflation rises unexpectedly. A higher withdrawal rate would accelerate the depletion of the portfolio’s principle, potentially leading to a situation where the portfolio may run out earlier than expected. Moreover, higher withdrawal rates also limit a portfolio’s growth potential. Since a large portion of the assets is being used for current expenses, less is left to invest and compound over time. This can be particularly detrimental during the early years, as the effects of compounding are most potent over the longer term.