What does the capital withdrawal ratio mean?
Capital withdrawal rate refers to the percentage of total assets falling from the highest point in a period of time. Generally speaking, it refers to the maximum extraction ratio, that is, the percentage of total assets falling from the highest point in history. Used to describe the worst situation that you may face after you start investing.
The formula for calculating the maximum extraction ratio is: maximum extraction ratio = current total assets/historical highest value of total assets-1. For example, the historical peak of total assets 1 10 yuan, and then decreased from the historical peak1/0 yuan to 105 yuan, and the extraction ratio was105/1/.
After calculating the maximum withdrawal ratio of the fund, you can judge the risks you need to bear according to this ratio. It should be noted that the retracement may not necessarily bring losses, but may only reduce the income. Divide the annualized rate of return by the maximum withdrawal ratio to calculate the income-risk ratio. If the ratio of return to risk can reach 1 times, it can be considered that this investment strategy is qualified and effective.
The above is the answer to "what does the capital withdrawal ratio mean?" I believe everyone has a certain understanding.