The Goal of The Wiley Group
We'll now move away from evaluating past
performance of actual investments and indices into the realm of
hypothetical analysis and the study of probability of future
success and evaluate how a retirement income distribution
specialist should construct a portfolio.
In putting together portfolios designed for a lifetime of
income, our goal at The Wiley Group is to maximize the probability
of long-term success by balancing the risk and return potential of
the portfolios with low volatility and consistent cash flow.
Contrary to the intuitive argument that a higher average return is
better, regardless of the cost, we've discovered that by accepting
a lower return and therefore taking less risk annually, a
hypothetical retirement portfolio actually has greater chance of
success over a thirty year retirement.
If The Wiley Group is able to manage the risk appropriately and
maintain a consistent return, then we believe the likelihood of a
retiree running out of money later in life is diminished for two
reasons. First, the empirical data given multiple sequences
of returns result in fewer plan failures over 30 years of
withdrawals. Second, an investor who endures smaller
downturns during periods of extreme volatility may be less likely
to radically alter a portfolio strategy and more likely to remain
invested for the duration of retirement, thus leading to a higher
chance of success.
Next Section: Portfolio Construction
