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Reverse Dollar Cost Averaging
What is Reverse Dollar Cost Averaging?
Often times, when an investor sells a fixed amount of an accumulated investment to fund their retirement, inefficiencies occur because the individual is forced to sell their investments regardless of the price per share. In order to optimize these sales during normal changes in market conditions, specific Reverse Dollar Cost Averaging Accounts are established to strategically time withdrawals in order to positively correspond with changing market conditions.
What are the advantages of Reverse Dollar Averaging?
This method allows investors to protect themselves against improper decumulation. Decumulation is the process of systematically deploying one’s investments to fund predetermined income needs. This can often lead to unnecessary losses due to withdrawals and how they correspond to market fluctuations. Proper withdrawal strategy and planning allows for better timing and market optimization of decumulation, thereby reducing undesired losses.
Who qualifies & why should you adopt?
Reverse Dollar Cost Averaging typically benefits individuals with current income and withdrawal needs. By optimizing investment withdrawals through strategic planning, investors are able to improve their return on investments. Unfortunately, most individuals either ignore the negative effects of Reverse Dollar Cost Averaging or are unaware how to combat against the negative effects decumulation.