The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

Drawdown definition

A drawdown can be one of two things. It can either be the decline in an asset price or a portfolio value over a specific period from peak to trough or high to low, or the proportion of a pension that a retiree withdraws each year.

Drawdown definition

A drawdown can be one of two things. It can either be the decline in an asset price or a portfolio value over a specific period from peak to trough or high to low, or the proportion of a pension that a retiree withdraws each year.

In the first definition, it is usually quoted as a percentage. It is used as one way to help work out the risk-to-reward of an investment.

In the second definition, drawdown is a critical factor in pension planning and at the moment of retirement. If the drawdown is too high during retirement, then a retiree could struggle late in life, while if drawdown is too low then a retiree may have a lot left over when they die. 

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