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The same average return, two completely different outcomes
Published by The Retail Trader · AUG 04, 2026 · Risk Management
Two portfolios can have exactly the same ten-year average return and completely different final corpuses. The only difference is when the bad years came.
If you are only investing and not withdrawing, the order makes little difference. The problem starts when you are making regular withdrawals.
A large loss in the early years of retirement is the most expensive, because at that point the withdrawal is coming out of a smaller corpus and very little base is left for recovery.
These four things make this risk smaller:
• Set aside a few years of expenses in less volatile assets.
• Keep the withdrawal rate flexible — withdraw a little less in a bad year.
• Reduce the equity allocation as you approach the goal.
• Do not take one big bet in the last years of building the corpus.
Planning with the average return is easy, and wrong. A plan is strong only if it also works in the scenario where the first two years go badly — because that scenario is as possible as any other.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no guaranteed-return claim, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.