HOW TO MANAGE RETIREMENT INCOME

It's a foundational truth in long-term investing: stocks are the most powerful engine for wealth creation. Historically, no other asset class has delivered the same level of growth over decades. If you are serious about building a robust retirement fund, a significant allocation to equities is non-negotiable.

However, a portfolio composed of 100% stocks is a high-wire act that most retirees and near-retirees cannot afford to maintain. While the rewards are great during bull markets, the risk of a major market downturn—especially early in retirement—can devastate a savings plan through a phenomenon known as Sequence of Returns Risk. Drawing down a portfolio while its value is depressed can lock in losses, making recovery exceptionally difficult.

The dilemma is clear: how do you capture the full, long-term growth potential of the stock market without exposing your entire retirement to its volatile swings?

The Nerat Capital Solution: Income Generation while Maintaining Full Stock Exposure

The traditional solution has been diversification: reducing stock exposure in favor of lower-risk assets like bonds as you age. While less volatile, this path inevitably limits your compounding potential.

Nerat Capital has developed a comprehensive strategy that flips this conventional wisdom on its head. Instead of sacrificing growth by selling stocks for bonds, the strategy aims to keep 100% exposure to high-growth equities while simultaneously generating a high, reliable stream of income to support necessary withdrawals.

This approach resolves the core problem of Sequence of Returns Risk:

1. Generating a "Withdrawal Buffer"

The cornerstone of the Nerat strategy is the strategic use of sophisticated financial instruments to create a substantial income stream. This income acts as a "Withdrawal Buffer," or an artificial dividend, large enough to cover partner’s planned annual withdrawal.

• In a normal market, the partner withdraws the income generated by the portfolio, leaving the principal—the core stock holdings—intact and free to compound.

• In a bear market, the partner still withdraws the generated income. Because they are not forced to sell depressed assets, they can maintain their full equity position. This significantly increases the odds that the portfolio will recover and resume compounding once the market turns.

2. Strategic Asset Protection

Maintaining a full stock exposure portfolio requires vigilance. Nerat Capital integrates dynamic strategies designed to act as a defensive layer around the core equity holdings. These strategies are not meant to replace the growth engine of stocks but rather to mitigate catastrophic drawdowns that could jeopardize the entire plan.

3. Maintaining the Growth Engine

Crucially, the capital allocated to the stock market remains invested in assets with high long-term growth potential. By protecting withdrawals with a dedicated income layer, Nerat Capital seeks to ensure that the core equity allocation can continue to benefit from the power of compounding—the essential ingredient for exponential wealth creation.

The Outcome: Growth, Income and Security

The Nerat Capital approach is designed to provide investors with the best of both worlds:

• Unfettered Growth Potential: A portfolio concentrated in the single asset class most likely to deliver exponential returns over the long term.

• Retirement Security: A high, generated income stream that supports withdrawals, prevents forced selling during market downturns, and effectively shields the portfolio from the detrimental effects of Sequence of Returns Risk.

By separating the need for income from the need for growth, Nerat Capital offers a compelling solution for investors who refuse to settle for the mediocre returns of overly conservative portfolios but demand a robust defense for their retirement future.

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