Investment
Drawdown
Also known as: Portfolio Decline, Investment Withdrawal, Capital Drawdown
The decline in investment value from peak to trough, or the process of making systematic withdrawals from investments.
Detailed Explanation
Drawdown has two meanings in finance: (1) The maximum decline in portfolio value from a peak to a subsequent trough, often expressed as a percentage, and (2) The systematic withdrawal of money from investments, particularly during retirement. Understanding drawdown risk helps investors prepare for market volatility, while drawdown strategies help retirees structure sustainable income from their accumulated wealth.