Comparison
Recovery Across Drawdown Depths: The Gain Required and the Time It Takes
How much harder does recovery become as a loss gets deeper, and how long does each depth take at a stated constant return?
The short answer
The gain a loss requires grows faster than the loss itself. A 20% drawdown needs 25.00% to get back to the old balance; a 50% drawdown needs 100.00%; a 70% drawdown needs 233.33%.
At an assumed 6.00% a year, and with nothing added, those three take about 3 years 10 months, 11 years 11 months and 20 years 8 months. These are outputs of a model, not forecasts.
- Who it applies to
- A fixed reference set of drawdown depths under stated constant return assumptions, with no contributions and no fees. It compares depths against each other, not products or portfolios.
- What this does not tell you
- It does not describe how long any real recovery took or will take. Returns do not arrive at a constant rate, the order in which they arrive changes the outcome, and nothing here models fees, tax or inflation.
Model Drawdown Recovery v1.0, from the same calculation the Drawdown Recovery Tool runs.
What is being compared
One question is asked of every depth in the same way, so the depths can be read against each other rather than one at a time. Nothing varies between rows except the size of the loss, and nothing varies between columns except the assumed return.
| Drawdown depths compared | 10% · 20% · 30% · 40% · 50% · 60% · 70% |
|---|---|
| Assumed constant annual returns | 4.00% · 6.00% · 8.00% |
| Contributions | None. Every duration is what the return assumption alone produced |
| Recovery target | The old balance, in nominal terms |
| Compounding | Monthly, from the effective annual rate |
| Fees, tax and inflation | Not modelled anywhere on this page |
The three returns are illustrative: numbers chosen so the depths can be compared under a stated assumption, not expectations, historical averages or claims about any market. No depth is described or implied to be normal, likely or survivable.
The gain each depth requires
This column depends on the depth alone. No return assumption enters it, which is why it is one column rather than three: the gain a loss requires is a property of the loss.
| Drawdown | Capital remaining | Gain required |
|---|---|---|
| 10% | 90% | 11.11% |
| 20% | 80% | 25.00% |
| 30% | 70% | 42.86% |
| 40% | 60% | 66.67% |
| 50% | 50% | 100.00% |
| 60% | 40% | 150.00% |
| 70% | 30% | 233.33% |
The two columns are the whole mechanism. A loss leaves a smaller balance, and the gain is measured against that smaller balance rather than against the one that was lost — so the further the base falls, the larger the percentage that has to be applied to it. The reason this is a denominator effect rather than a coincidence is set out in Why Losses Require Larger Gains. This page measures how the requirement changes across depths rather than re-explaining its cause.
How long returns alone would take
The gain required is one dimension and the time to produce it is another, and they do not move together. A deeper loss needs a larger gain and needs it out of a smaller base, so the two effects compound rather than cancel.
| Drawdown | 4.00% a year | 6.00% a year | 8.00% a year |
|---|---|---|---|
| 10% | 2 years 8 months | 1 year 10 months | 1 year 4 months |
| 20% | 5 years 8 months | 3 years 10 months | 2 years 11 months |
| 30% | 9 years 1 month | 6 years 1 month | 4 years 8 months |
| 40% | 13 years | 8 years 9 months | 6 years 8 months |
| 50% | 17 years 8 months | 11 years 11 months | 9 years |
| 60% | 23 years 4 months | 15 years 9 months | 11 years 11 months |
| 70% | 30 years 8 months | 20 years 8 months | 15 years 8 months |
Read a row to see what a stronger return assumption is worth at one depth, and a column to see what depth costs at one assumption. Both readings are the point of putting the two dimensions in one table.
Why nothing is added along the way
Every duration above is return-only. No contribution is modelled, and that is a deliberate choice rather than a simplification: money paid in afterwards rebuilds a balance, and rebuilding a balance is not the same fact as recovering an investment loss.
A plan that keeps contributing can reach the old balance far sooner than any figure in this table, and still not have recovered a single point of the loss through performance. Mixing the two would make the reference easier to read and would erase the distinction it exists to hold.
Contribution-assisted recovery is a real question, and it needs a contribution amount and a starting balance that only you have. Drawdown Recovery Calculator models it, separates what the return did from what the new money did, and says so on the result.
Identical arithmetic is not an identical recovery
Two portfolios that are both 50% down require the same 100.00% on paper and may have almost nothing else in common. The gain required is a statement about two numbers. What actually happens depends on what was held, why it fell, whether it can recover at all, what it costs to hold, what is being paid in or taken out, and how long the holder can wait.
A larger required gain describes a steeper hurdle. It does not establish that a position will clear it, that it will clear it faster at a higher assumed return, or that any action is warranted. Nothing on this page is a reason to hold, add to, or sell anything.
This page belongs to a wider subject. Explore the Drawdown and recovery topic to see which UBWHY asset answers which question.
What this reference does not determine
The figures on this page are outputs of a UBWHY calculation model applied to the assumptions stated above. They are not historical returns, expected returns, the performance of any investment, or a forecast. The reference cannot determine:
- future returns, or what any market will actually do
- expected returns: each rate is an assumption entered into the model, not a projection
- how long a real recovery took, or will take, anywhere
- that returns arrive at a constant rate, which they do not
- the order in which gains and losses occur, which this model does not represent
- tax of any kind, and no wrapper, allowance, jurisdiction or rate is modelled
- inflation, so every figure here is nominal
- fees, which would lengthen every duration in the table
- whether holding, adding or selling is appropriate for any particular person
The set also stops at 70% rather than running to a total loss. At a 100% drawdown there is no finite gain that returns the balance, because there is nothing left to compound — the calculator states that as an outcome rather than printing a number, and extending the ladder toward it would add rows that teach nothing.
None of this is financial, legal or tax advice, and no product is recommended, ranked or named anywhere on this page.
Where these figures come from
Every number above is produced by Drawdown Recovery v1.0, the same calculation model behind the Drawdown Recovery Calculator, run at build time over the reference set. Nothing on this page is typed by hand.
Three of the published cells are additionally reproduced by the model's own verified test cases — DR-1 and DR-4 for the gain required at 30% and 40%, and DR-3 for both the gain required and the 8.00% duration at 50% — which are recalculated independently on every build. The remaining figures are pinned by exact regression tests against the same model.