Broker Check

Accumulation vs. Distribution

What is Accumulation?

Accumulation can be defined in many ways, but the most common of these is allowing your money to accumulate over time.  Having time on your side allows for both upside and downside market conditions to occur knowing that growth will happen.  This is typically when you are in the pre-retirement or working phase.  As you can see from the chart below the sequence of returns doesn’t matter, you still get the same ending account value.


What is Distribution?

Distribution is when the money generated from your investments is paid out to you. As you get closer and even enter retirement, you are nearing a common phase in life called distribution.

A period in which it is tougher to absorb losses and hope for a rebound in your investments. During this time, it is important to get focused on your investing to meet the new realities in your life.  Sequence of returns is very important in this phase because if you are not careful your account will not be able to sustain market losses sooner than later, as you can see in the distribution portion of the chart below.


"Rates of return are hypothetical, are provided for illustrative purposes only, and do not reflect the performance of an actual movement."