Question:
❓Two people invest the same total amount over 25 years and earn the same average return.
What can still cause one person to end up with much less money than the other?
A) Which company or app they use for their investments
B) The order in which they experience good and bad market years
C) Whether they use automatic deposits or manual deposits
D) How many different funds they own
Answer:
✅ B) The order in which they experience good and bad market years.
Here’s why:
This is called “sequence of returns” risk.
If someone hits a string of bad years right when they are taking money out in retirement, the account can shrink faster. Even if the long-term average return is the same as someone else’s, the timing of gains and losses can change how long their money lasts.
Why the other options are not the best choice:
A) The company or app you use may change your experience, but it doesn’t change the market’s returns.
C) Automation is great for building good habits, but by itself, it doesn’t change when the market goes up or down.
D) Holding more funds isn’t the main issue here. Diversification matters, but if the average return is the same, the key difference in this example is the sequence of returns.
Takeaway:
The timing of returns matters, especially when you start taking money out. That’s why your Financial Freedom path needs a plan for both the “build” years and the “use” years.
Inside The World Changers Network, we show you how to think about this when you set up accounts and income streams, so your money is built to last—not just to grow.
