Investment
Sequence Risk
Also known as: Timing Risk, Return Sequence Risk
The risk that poor investment returns occur near or during your goal date, severely impacting your outcome.
Detailed Explanation
Sequence Risk, also called sequence-of-returns risk, is the danger that negative returns happen when you're withdrawing from or approaching your investment goal. Even if long-term average returns are good, poor returns in the final few years can devastate your portfolio. This is why asset allocation should become more conservative as you approach goal dates. It's particularly important for retirement planning and near-term financial goals.