Hi....very new to PRC and still kicking the tires. I was curious to know if anyone out there has modeled a market correction and, if so, what was the best way to complete. Curious to know the impact on my portfolio, retiring this year, if say there was a X% drop in the market followed by a X% recovery a few years later. Is this possible to model? Thanks.
In PRC2021 Gold, you can use the Bear Market Analysis feature which you'll find under the Analysis pages. In PRC2022 Gold, you can use the Historic Sequence Analysis tool (located on the Analysis > Run Analysis page) to specify any particular year in Pralana's historic returns database to see how that sequence would effect your scenario. 1965 is a particularly bad sequence.
It's important to understand sequence risk, i.e a bad, prolonged market right after retirement. A correct asset allocation/asset location strategy can protect you from that. For my clients that want to protect against this and sleep well at night, we discuss and deploy a bucketing strategy, and make sure your investments are solid as well.
