It is wise to anticipate and consider a range of potential investment returns
over various time horizons in your financial planning.
This is nowhere more evident than in returns on retirement saving, which are subject to wide ranges of annual variability and cumulative variability
over various time horizons.30 This central aspect of reality does not come to the fore in deterministic modelling.
One of the easiest solutions I see to this problem is to think about your portfolio in terms of
your various time horizons and risks.
Charlie Bilello, one of my favorite follows on Twitter, analyzed the relationship between market valuation and future returns (over
various time horizons) in a recent post Valuation, Timing, and a Range of Outcomes.
Asset prices are always in an unstable equilibrium that takes account of the many views of what the world will be like over
various time horizons.
A person may have multiple investments in place to account for different financial goals that result in
various time horizons.
: While Kotak Opportunities Fund have performed equally well over
various time horizons, in terms of risk - adjusted return, our preferred ones are Kotak Select Focus and Birla Equity Fund, in space of Multi-cap Equity category.
Looking at rolling monthly returns over the last 50 plus years, we can see the percentage outperformance of IFA Index Portfolio 100 versus IFA Index Portfolio 0 over
various time horizons.