Sequence risk
Risk & psychologyThe risk that the order in which returns arrive damages an outcome.
In plain terms
While saving a fall is a discount; while withdrawing it forces you to sell cheap.
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Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Guaranteed return
Market basicsA return that is certain rather than expected — most commonly the interest avoided by repaying a loan ahead of schedule.
In plain terms
Treating a guaranteed 8.8% and a hoped-for 12% as two numbers on the same scale is the core error in the prepay-or-invest question. Avoided interest also carries no tax and no sequence risk.