It is very important to understand just how negative the impact of selling assets at a loss is on the long term portfolio performance of a portfolio.
Investor A: Assets are invested in a single mixed asset pension fund as follows:
Investor B: Assets are invested in Tideway Horizon Portfolios as follows:
An investor needs 10% capital withdrawal after 1 year, financial markets are under stress and the value of the assets has fallen to 89% of the initial investment in both cases.
Once markets recover to the original values, the Single Mixed Fund is valued at 88.87% of the starting value but the Horizon Portfolio is valued at 90% of the original value.
This means that the investor selling across all the assets has paid an extra 1.13%, which does not sound like a lot but that is to get access to 10% of the capital value so is actually a penalty cost of 11.3% on the capital accessed.
This highlights the very powerful effect of "selling low" on long term returns.