Episode 266 - Is Volatility A Friend Or Foe?

In this episode, Ryan Burklo and Alex Collins discuss the topic of volatility and whether it is a friend or a foe. They explore how volatility can be beneficial during the accumulation phase, as it allows for higher rates of return. However, as retirement approaches and withdrawals are made from the portfolio, volatility can become a risk. They also emphasize the importance of diversification and having a balanced portfolio across different asset classes. The hosts use examples and a sequence of return calculator to illustrate the impact of volatility on investment returns. They conclude by encouraging listeners to view volatility as both a friend and a foe and to set up their portfolios and balance sheets accordingly.

Takeaways

Volatility can be a friend during the accumulation phase as it allows for higher rates of return.
As retirement approaches, volatility can become a risk, especially when withdrawals are made from the portfolio.
Diversification across different asset classes is crucial to mitigate the impact of volatility.
Viewing volatility as both a friend and a foe can help in setting up a balanced portfolio and balance sheet.

Chapters

00:00 Introduction: Is Volatility a Friend or Foe?
03:49 The Benefits of Volatility in the Accumulation Phase
06:30 The Risks of Volatility in Retirement
11:18 The Importance of Diversification
18:24 Viewing Volatility as Both a Friend and a Foe