When it comes to investing, everybody thinks about progress in terms of returns. This makes sense since without them financial goals are much harder to achieve, but very little time is spent thinking about losses and the role they play in achieving (or not achieving) those longer-term returns. Even when looking at most financial plans – whether simplistically crude or detailed – usually there’s some assumption for returns achieved based on a pre-determined risk tolerance. Aggressive investors usually assume higher returns while those with a more conservative predisposition will assume lower, safer returns. We’ll address the fatal flaw of assuming…
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