Why Deric Ned says the rules of investing change when you turn 60

For most of a person’s working life, the standard advice around investing is fairly consistent: stay in the market, ride out the dips, and let time do its job. That advice is grounded in real math. Over long enough stretches, markets have historically recovered from even severe downturns. The problem, according to Deric Ned, founder of Ridgemont Capital in Pasadena, California, is that the advice stops being accurate the moment someone runs out of time to wait. “Most people think that if I just buy and hold, the market will always come back,” Deric says. “And that’s true. But when you’re 60, that rule doesn’t apply anymore because you don’t have a runway to wait that out.” That shift, from accumulating money to drawing it down, is one of the most consequential changes in a person’s financial life. It’s also one of the least discussed. What the NASDAQ collapse actually teaches us Deric Ned uses a specific historical example to make this point concrete. In 2000, the NASDAQ dropped 78 percent from its peak to its lowest point. The recovery took 15 years. For a 30 or 40 year-old investor, that timeline is painful but manageable. For a 72-year-old taking regular withdrawals from the same account, it is a different situation entirely. The account doesn’t just lose value during the crash. Every withdrawal made during the recovery period pulls out money that can no longer participate in the rebound. The math compounds in the wrong direction. “If you’re 72 and taking withdrawals from that money, you’re screwed,” Deric says plainly. This isn’t a prediction about what markets will or won’t do. It’s a structural observation about how withdrawals interact with losses, and why the same market behavior that a younger investor can absorb becomes far more damaging for someone who is already drawing income from their portfolio. The sequence of returns problem What Deric is describing has a name in financial planning: sequence of returns risk. It refers to the order in which investment gains and losses occur, and why that order matters far more during retirement than it does during the years when someone is still adding money to an account. When money is coming in, an early market drop actually works in a saver’s favor. They’re buying more shares at lower prices. When money is coming out, the opposite is true. A significant loss early in retirement means selling more shares to cover the same withdrawal, leaving fewer shares available to recover when the market eventually turns around. Two people can experience the same average return over 20 years and end up in very different financial positions depending entirely on when the bad years hit. The conversation Deric keeps having Deric has this conversation regularly with people who are in or approaching retirement. They often arrive having done what they were told: they stayed in, they held through downturns, and they built a meaningful account balance. What they haven’t done is think through what the next phase of that money’s life looks like under different market conditions. His approach centers on helping people understand what they actually own, why they own it, and how it would behave in a range of scenarios, including bad ones. That means assessing whether a growth-oriented portfolio is still the right structure for someone who now needs income. “When you show up to most financial services companies, the incentive is: give me your money; I’m going to put it in stocks,” Deric says. “If your account goes up, I’ll tell you I’m a genius. If your account goes down, I’m going to tell you to just ride it out. That’s what every financial advisor does.” The alternative he offers isn’t about predicting crashes or abandoning growth altogether. It’s about building a structure that fits what a person actually needs at a specific point in their life, with a realistic picture of what the downside looks like if the timing doesn’t cooperate. For folks in their late 50s or 60s, that kind of planning conversation is worth having before the market makes the decision for them. DISCLAIMER – “Views Expressed Disclaimer – The information provided in this content is intended for general informational purposes only and should not be considered financial, investment, legal, tax, or health advice, nor relied upon as a substitute for professional guidance tailored to your personal circumstances. The opinions expressed are solely those of the author and do not necessarily represent the views of any other individual, organization, agency, employer, or company, including NEO CYMED PUBLISHING LIMITED (operating under the name Cyprus-Mail).