Why a 25% loss needs a 33.3% gain.
Start at 100. Lose 25, and you have 75. Making back the same 25 now requires 25 ÷ 75 = 33.3%. The percentage base has changed.
Use a decimal: 0.25 ÷ 0.75 = 0.3333, or 33.33%
| Loss from peak | Remaining from 100 | Gain to recover |
|---|---|---|
| 10% | 90 | 11.11% |
| 20% | 80 | 25% |
| 25% | 75 | 33.33% |
| 50% | 50 | 100% |
| 75% | 25 | 300% |
| 90% | 10 | 900% |
| 100% | 0 | No finite gain |
A withdrawal changes the balance, not the investment’s return.
With 100,000 at the peak, a 25% loss leaves 75,000. Withdraw 10,000 and 65,000 remains. Returning that account balance to 100,000 now requires a 53.85% gain. Part of that gap is money you withdrew; it is not additional investment underperformance. The withdrawn money may still be part of your wider wealth.
Gain to restore balance = peak ÷ remaining − 1
The withdrawal is made once, immediately after the loss. There are no further cash flows. This tool is not a withdrawal plan, a sequence-of-returns simulation or a calculation of time-weighted investment performance.
“How long?” requires an assumption we cannot know.
The time illustration asks what would happen if the remaining balance grew smoothly at the same rate each year, with no other cash flows or costs. It solves a compound-growth equation; it does not estimate when a real portfolio will recover.
At a hypothetical constant 5%, recovering from a 25% loss takes about 5.9 years. Real returns vary, and a future peak is not assured. If a gap remains and the assumed growth is zero or negative, the model never reaches the starting balance. If the balance is zero, growth alone cannot rebuild it; new capital would be a different scenario.
Volatility is not drawdown.
Volatility describes variability in returns; drawdown measures a decline from a prior peak. A 10% volatility target does not mean “at most a 10% loss.” A volatility-sizing rule changes exposure, while the realized sequence of returns determines the path and its drawdowns. Explore these separately with the volatility position-sizing calculator.
This illustration accepts a loss percentage rather than analyzing a historical return series. It does not calculate a portfolio’s observed maximum drawdown.
Method notes
Educational model by Positive Skew · Method version 1 · 17 October 2026. The results are algebraic identities under the assumptions shown, not historical observations or personalized financial advice. All examples are hypothetical.