What is Sequence of Returns Risk?

By | Investments, Retirement

Sequence of returns risk can put your retirement portfolio in jeopardy, but what is it, and how do you fight it?

We get it. Retirement can be scary. We know this because it’s our job to help our clients plan for and seamlessly transition into what should be one of the most rewarding times of their lives. What we often find, however, is that most are worried about retirement because of the risks that come with it. But what are some of the risks that strike fear in the hearts of retirement hopefuls? Well, the first is related to longevity—it’s the possibility of running out of money as you get older, and being unable to go back to work in order to support yourself. We also find that people getting ready to retire are concerned about inflation, the cost of health care, the possibility of needing long-term care and more.

There’s one risk, however, that hides in the shadows, waiting to rear its ugly head and throw turbulence into the lives of new retirees and those right on the edge of retirement. It’s called market risk, or the possibility that you could lose your retirement money during market crashes or downturns. How might this look? Specifically, something called sequence of returns risk can be the most dangerous aspect of market risk. And while it might sound complicated, it’s a simple concept with the potential to have major implications on your retirement dreams. Let’s go over what sequence of returns risk is, as well as a few ways you may be able to fight it!

What is Sequence of Returns Risk?

Simply put, sequence of returns risk is the risk of negative market returns occurring right before you retire and/or very early in your retirement. During this time, market downturns can have a much more significant impact on your portfolio.

Again, it might sound like some buzzword the financial industry throws around to scare consumers, but sequence of returns risk is exactly what it sounds like. It’s the sequence, or the order, in which your portfolio provides market returns. It’s key to remember that sequence of returns risk is specifically associated with money directly invested in the market. That means it could apply to vehicles like employer-sponsored retirement accounts, traditional and Roth IRAs, mutual funds, brokerage accounts, variable annuities and any other assets that can lose value during market downturns.

Now, let’s think about your goals for your retirement. If you’re just starting your career, or you’re right in the middle of your working years, you may contribute to your various saving and investing vehicles with the goal of having a large pool of funds when you finally retire at, say, 65 years old. You’d hope that diligent saving and favorable returns would bring your assets to their highest total right at that point, giving you ample funds to draw from once you retire.

Sequence of returns risk is the potential of the market dipping near the end of your career, or in the first few years of your retirement, meaning those drops affect your account balances at their peak. You would then take losses on greater amounts of money, creating greater losses. While you never want to experience dips, it makes sense why you’d hope those periods of market volatility that you will likely encounter at some point during retirement occur farther down the road, especially when you’re concurrently withdrawing money to support your lifestyle.

An Example Where Both Retirees Have $1 Million Saved

Just as an example, let’s consider two retirees, and what happens during their first 10 years of retirement. Both have $1 million saved, and they both determine they need to withdraw $50,000 per year from their accounts to fund their lifestyles.

Our first retiree is lucky. They retire and then experience eight years of a bull market, growing their portfolio by 5% each year. In the next two years, however, they experience declines of 5%, bringing their balance back down.

The other retiree sees the exact opposite sequence. They immediately encounter a bear market upon entering retirement, which drops their accounts by 5% in each of the first two years. Then the market rebounds and goes up 5% each year for the next eight years.

Both retirees continued to withdraw $50,000 per year from their accounts. So, what was the result?

Even though both retirees had the same initial balance, withdrew the same amounts, experienced eight years of bull markets and two years of bear markets, the order or “sequence of returns” made a big difference.

The first retiree didn’t experience market dips at the beginning when their account balances were highest. At the end of the 10-year period, they still had $788,329 left in their account.

The other retiree, on the other hand, wasn’t so lucky. They took losses during the first two years of their retirement, on their highest balances, and by the end of the 10-year period, they only had $695,226.

(Please remember this example is purely hypothetical and not reflective of real scenarios or real people. We simply used a starting balance of $1 million for each person, then subtracted $50,000 in income at the beginning of each year, then multiplied the accounts’ balances by the annual positive or negative effect on the market we imagined for this example. Actual market returns are unpredictable and tend to vary far more than in the case study shown. This is strictly to display the potential effects of the aforementioned risk.)

What are Some Ways to Mitigate Sequence of Returns Risk?

You can see how the sequence of your returns can affect your portfolio. The market is unpredictable and bottomless, so it’s important to try to shield yourself from, or at least mitigate the possibility of, taking those losses at the starting gate. But how can you do that when the market is completely out of your control? Well, you have a few options.

First and foremost, you can work with a financial professional to diversify your portfolio. While diversification can never guarantee any level of protection or growth, it may give you the ability to withstand dips in certain sectors of the market. It also spreads risk across different asset classes, or even different categories within the market itself. That can potentially help you avoid taking losses in your entire portfolio, even if one sector experiences headwinds.

For instance, non-correlated asset classes, which could include annuities or life insurance policies, might be a retirement diversification option for some people. Modern policy designs like fixed-indexed annuities and indexed universal life insurance policies are typically linked to a market index, while not actually participating in the market. These products can provide the upside of market gains while still protecting the principal, or the money used to fund the policy, in addition to locking in the gains.

These solutions may not match every consumer’s situation or financial objectives, however, so it’s important to speak to your advisor to explore policies and see if they make sense for your portfolio. For some people, annuities can provide a stream of retirement income that can cover lifestyle expenses, allowing retirees to leave their assets in the market during downturns rather than being forced to make withdrawals.

Be sure to speak with a financial professional who understands your circumstances, goals and tolerance for risk. The right partner can help you develop a custom withdrawal strategy and a plan to generate a reliable stream of income with your accumulated retirement assets. Your plan may include portfolio diversification, the establishment of a liquid emergency fund, the inclusion of alternative strategies and more, all with the intention of making your money last your entire life.

If you have any questions about how you can fight sequence of returns risk, give us a call today! You can reach Bulwark Capital Management in Tacoma, Washington at 253.509.0395


Trek Financial, LLC dba Trek Financial is an SEC registered investment adviser. Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. Any hypotheticals are for illustrative purposes only and are not to be construed as predictive of any specific outcome. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.

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Diversification, Patience, and Consistency

By | Financial Planning, Investments

Here are three important principles you may want to include in your investment philosophy.

Regardless of how the markets may perform, it’s important to stick to an investment strategy that aligns with your goals and aims to help you potentially benefit from favorable market conditions while also seeking to mitigate risks during less favorable periods, including the possibility of loss. That’s why we encourage you to consider making the following three principles part of your investment philosophy:


The saying “don’t put all your eggs in one basket” has some application to investing. Over time, certain asset classes may perform better than others. If your assets are mostly held in one kind of investment, you could find yourself under a bit of pressure if that asset class experiences some volatility.

Keep in mind that diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Asset allocation strategies also are used in portfolio management. When financial professionals ask you questions about your goals, time horizon, and tolerance for risk, they are getting a better idea about what asset classes may be appropriate for your situation. But like diversification, asset allocation is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.


Impatient investors can get too focused on the day-to-day doings of the financial markets. They can be looking for short-term opportunities rather than longer-term potential. Patient investors, on the other hand, understand that markets fluctuate, and they have built portfolios based on their time horizon, risk tolerance, and goals. A short-term focus may add stress and anxiety to your life, and it could lead to frustration with the investing process.


Most people invest a little at a time, within their budget, and with regularity. They invest $50 or $100 or more per month in their retirement account or similar investments. They are investing on “autopilot” to help themselves attempt to build wealth over time.

Consistent investing does not protect against a loss in a declining market or guarantee a profit in a rising market. Consistent investing, sometimes referred to as dollar-cost averaging, is the process of investing a fixed amount of money in an investment vehicle at regular intervals, usually monthly, for an extended period of time regardless of price.

Investors should evaluate their financial ability to continue making purchases through periods of declining and rising prices. The return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

To start crafting a custom investment strategy, give us a call today! You can reach Bulwark Capital Management in Tacoma, Washington at 253.509.0395


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Investing Alternatives During Periods of Market Volatility

By | Investments

During periods of market volatility, investors may look to alternative vehicles. Here are some options to consider.

2022 was a difficult year for investors, with all three major market indexes dipping simultaneously and taking their biggest hit since the housing crisis of 2008[1,2,3]. Investors are increasingly aware of market volatility and uncertainty, which can influence their investment decisions. While recent market trends have shown positive performance [1,2,3], it is important to consider the potential for volatility and to explore diverse investment options that offer growth potential and risk mitigation.

Though diversification of assets certainly doesn’t guarantee success, it can play a role in potentially mitigating risk and pursuing sustained growth. That’s why it can be a good idea to consider alternative investment and savings options. Here are a few options you may have when looking to diversify your investment portfolio.

Real Estate

Traditionally, investing in real estate involves purchasing property with the potential for rental income or appreciation. This can be a great way to potentially earn steady income. However, it’s important to be aware of the associated risks, such as difficulties finding tenants or temporary softening in the housing market.

Additionally, managing your rental property can be strenuous, whether that’s because of difficult tenants, maintenance costs or other ancillary costs and challenges associated with owning and renting property. It’s important to thoroughly research your investment property and have a plan to cover property costs, as well as a contingency plan in the event that it becomes more difficult to find a reliable tenant or liquidate if you want to sell.

There are vehicles for investing in real estate where you are not involved in day-to-day property management, but these options have other risks to consider and should be undertaken carefully working with trusted financial, tax and legal professionals.

Bank CDs and Treasury Bonds

Certificates of Deposit (CDs) and Treasury bonds are investment options that are often considered conservative in nature. CDs and Treasury bonds are similar in that they function as loans. The difference, however, is to whom your money is being loaned. Bank CDs, or certificates of deposit, are lump sum investments with a bank or credit union that are guaranteed up to $250,000 by the Federal Deposit Insurance Corporation, or the FDIC [4]. They earn interest for the duration of a predetermined period of time. Treasury bonds, on the other hand, are a loan to the government with specified interest rates for durations of either 20 or 30 years [5].

It’s important to consider that interest rates on CDs are often adjusted by banks during periods of high inflation to attract investors. This can make CDs more appealing during times of both high inflation and high interest rates. At the moment, interest rates are the highest they’ve been since 2008, potentially signaling a good time to purchase CDs [6]. While Treasury bonds also pay a predetermined interest rate over a set period of time, it’s worth noting that when interest rates rise, the value of existing Treasury bonds may decline as newer bonds with higher returns become more attractive. Both CDs and Treasury bonds are commonly regarded as safe and conservative investment options, but it can be a great idea to speak to your financial professional prior to purchasing either.


Annuities are contracts between you and an issuing insurance company. Annuity contracts (except variable annuities) typically provide both principal protection and a rate of growth that is guaranteed by the insurance carrier based on that company’s claims-paying ability. Fixed annuities work very similar to CDs but may pay more attractive interest rates. Other annuities, such as fixed indexed annuities, or FIAs, can provide growth linked to a specific market index, such as the S&P 500, while still protecting the principal. This investment option provides the opportunity to potentially benefit from market upswings while aiming to mitigate exposure to market downturns.

It can be extremely helpful to discuss your annuity options with a financial professional who understands annuities and has access to multiple products and insurance carriers in order to find a product that suits your unique situation and your goals.

Life Insurance

No longer is life insurance solely about the end. Now, it can be a beginning with modern product-development companies working to create customizable, client-oriented policies that can function as vehicles for retirement saving and income. While term life provides a payout upon death in a specific time window, permanent life insurance policies, like whole life and universal life, can come with a cash value portion that can potentially be accessed tax-free.

Based on the claims-paying ability of the issuing company, an indexed universal life policy, or an IUL, offers guarantees similar to a fixed-indexed annuity, such as principal protection and index-linked growth. IULs also offer flexible premiums, meaning that the policyholder can increase or decrease premiums by increasing or decreasing the amount that goes into the cash value portion or increasing or decreasing the insurance death benefit of the policy based on their circumstances while still keeping the policy in force.

Private Equity

Private equity investments can offer unique opportunities to invest in businesses and projects that are not publicly traded. These investments are often made through private companies, and they may provide the potential for greater returns. However, it’s important to be aware that private equity investments typically involve larger investment amounts compared to investing in publicly traded companies.

It’s important to consider the risks associated with private equity investments, including limited liquidity, lack of diversification and the potential for loss of capital. These types of investments may not be suitable for everyone and should be carefully evaluated based on your individual financial goals, risk tolerance and investment time horizon.

We understand the importance of exploring various investment options to meet your unique financial goals. While alternative investments may offer unique features, it’s important to note that no investment can guarantee complete protection from market volatility or downturns. However, we strive to help you navigate various investment choices to develop a well-diversified portfolio tailored to your needs. Give us a call today! You can reach Bulwark Capital Management at 253.509.0395.






Investment Advisory Services offered through Trek Financial LLC., an (SEC) Registered Investment Advisor.

Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein.

*Annuity guarantees are backed by the financial strength and claims paying ability of the issuing insurance company. Financial products and services if recommended may include investment advisory fees, commissions and/or other charges.

This article is not to be construed as investment advice. It is provided for informational purposes only and it should not be relied upon. It is recommended that you check with your financial advisor, tax professional and legal professionals when making any investment or any change to your investment portfolio. Your investments, insurance and savings vehicles should match your risk tolerance and be suitable as well as what’s best for your personal financial situation.


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Zach Abraham Weighs in On the EU’s Historic Coronavirus Stimulus Package

By | Geopolitical Affairs, Investments, Stock Market

Zach Abraham’s comments on the historic European Union’s $826 billion coronavirus stimulus package (750-billion-euro) were recently featured on both* and Yahoo! Finance.


The European Union is proposing a ($824 billion) coronavirus recovery plan to assist the bloc with its recovery. The funds, as well as targeted reinforcements to the long-term EU budget for 2021-2027, will bring the total financial firepower of the EU budget to 1.85 trillion euros, according to the European Commission.

EU Must Evolve To Survive, CIO Zach Abraham Says

“While the EU relief package will certainly help things in Europe, it appears to be more of a stop gap measure and pales in comparison to actions taken by the U.S. government,” said Zach Abraham, chief investment officer and principal at Bulwark Capital Management.

“Although we are keeping a watchful eye on all ECN and EU relief measures, we are far more focused on recent comments by Macron and Merkel that point to a willingness or at least an openness to a tighter fiscal union.”

In Abraham’s view, the EU cannot continue as it is structured today.

“Either Germany will have to relent on ECB guidelines which restrict the central bank from applying unilateral QE and other forms of monetary stimulus (currently the ECB can only apply monetary stimulus evenly across all member countries) or more countries, specifically Italy and Spain, will be forced to leave.” This issue is far more critical to the economic prospects of the EU as a whole, the professional investor said.


Interestingly, Germany announced it was seeking a fresh $112 billion coronavirus stimulus package, just days after the EU launched its historic $826 billion plan:


You can read the original articles here:

* With an estimated unique monthly visitor count of almost 1.5 million, Benzinga is a news and analysis service that focuses on global markets. It provides original, accurate and timely global financial content and features articles from industry experts and experienced analysts.

Zach Abraham: Coronavirus’ Effect on Cryptocurrency ‘Unpredictable’

By | Investments, Market Risk, News, Stock Market

Zach Abraham was recently quoted by Decrypt Debrief in their article, “Coronavirus, Bitcoin and the economy: what can we expect?”

Zach Abraham, Chief Investment Officer of financial services firm Bulwark Capital Management, agreed that the current economic situation is “incredibly unique,” and hard to predict.

“This is a different situation than 2008 but in some ways it’s much more unpredictable as the problems caused by excess are in every market,” he said. “The variables are endless and most of them aren’t looking too hot at the moment.”

You can read the full article HERE.



Zach Abraham Appears on Yahoo! Finance

By | In The Headlines, Investments, Stock Market

Zach Abraham, Principal and Chief Investment Officer of Bulwark Capital Management, appeared on Yahoo! Finance on March 13 to discuss the coronavirus outbreak and its impact on stock markets.


Back on March 13, the date of this interview, Seattle was the area of the United States hit first by the coronavirus—it was right on the front line with the COVID-19 outbreak. (Seattle is located about 34 miles from Bulwark Capital Management’s headquarters in Tacoma, Washington.) During the interview, Zach Abraham predicted at the time that people “might not be taking [the virus] seriously enough,” though the stock market certainly already was.

That afternoon, the government was expected to announce measures to help the economy, and Zach said that government intervention might stem the market sell off and help move markets to the positive. “We have a market that’s been fueled by the central banks’ intervention for the last decade, so there is a ‘Pavlovian’ psychological response built-in for that.”

But he warned about the long-term. “No one has a crystal ball, but one of the things we’ve been talking about for the last several years is that eventually the world is going to have to face some issues—something that more debt and printed money won’t fix.” For example, the drop in oil demand is just one example of how the corporate high-yield debt market could become a future negative factor for markets.

But with any economic crisis, It’s never just one thing or one issue at play. “I personally think that it will be at least a six- to eight-month timeline or longer to see the full effects of this market—to get economic clarity in terms of what the real backdrop is.”


Watch the full episode at this link:

Did the Fed and the White House Come to a Meeting of the Minds?

By | Bonds, Investments, Stock Market

On November 18, President Donald Trump invited Federal Reserve Board Chair Jerome Powell to meet at the White House with him and Treasury Secretary Steve Mnuchin. Afterwards Trump tweeted, “Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.”

While the Fed released a statement saying that the meeting covered “the economy, growth, employment and inflation,” the Fed said Powell’s remarks “were consistent” with those he made at last week’s congressional hearings. “[Powell] did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.” Powell told the president that monetary policy decisions will be “based solely on careful, objective and non-political analysis,” the statement said.

Zach Abraham, principal/CIO at Bulwark Capital Management, told reporters at the that, “This is simply a case of Trump throwing everything at the Fed but the kitchen sink. If we really want to keep China in check, the Fed and the White House must be on the same page. Beijing and the PBOC have strategically exploited Fed Independence and the inherent lag between monetary policy and economic reality on the ground.

“I’d assume Trump is merely trying to close this gap and make nice with Powell as he’s realized the need to be on the same page. I just don’t think the White House has realized that lower U.S. rates and a lower dollar are precisely what Beijing wants,” said Abraham.

Read the entire article here:


The is designed for municipal finance professionals, bond issuers, government officials, investors and other decision makers in the municipal bond industry; the website receives nearly 59,000 unique visitors per month. It provides breaking news, analysis and data regarding all areas of municipal finance. The site features news on the national as well as regional levels, and it contains market statistics, graphs, charts, photos and weekly indices.

How Will Lower Interest Rates Affect the Bond Market?

By | Bonds, Investments, Stock Market

On October 31, along with other financial industry experts,  Zach Abraham, Principal and Chief Investment Officer for Bulwark Capital Management was asked to weigh in regarding the Federal Reserve’s recent lowering of interest rates.

At that time, Federal Reserve Board Chair Jerome Powell had just made it clear the Fed expected to keep rates at a range of 1.50% to 1.75% unless events resulted in a “material reassessment” of the Fed’s outlook.

“While the rate cut certainly means that yields on treasuries are headed lower, it may not be so for the rest of the bond market,” said Zach Abraham, principal/CIO at Bulwark Capital Management.

“At some point in this cycle we will see spreads blow out. It’s inevitable, as it occurs in every cycle. Flight to safety puts a bid under treasuries while corporates are shunned as weakening economic fundamentals raise risks, or at least perceived risks, of corporate defaults.”

He called Powell’s claim that the Fed is on pause “a bit humorous.” The Fed trimmed the rate target by 75 basis points in the past three meetings and “launched a $100 billion standing repo facility (just quantitative easing by another name). It’s time we all face the facts. The Fed has a tiger by the tail and has no clue how to let go,” Abraham said. “Investors, as well as the market, are beginning to figure this out. Barring some exogenous/inflationary shock, we’re headed back to the zero bound.”

Read the entire article here:


The is designed for municipal finance professionals, bond issuers, government officials, investors and other decision makers in the municipal bond industry; the website receives nearly 59,000 unique visitors per month. It provides breaking news, analysis and data regarding all areas of municipal finance. The site features news on the national as well as regional levels, and it contains market statistics, graphs, charts, photos and weekly indices.