This Monte Carlo simulation supports planning for financial goals and related spending. Multiple cashflow goals can be applied based on different life stages, and the simulation supports the use of a linear glide path to transition from a career stage growth portfolio into a retirement stage income portfolio. The following simulation models are supported for portfolio returns:
| Asset Class | Allocation |
|---|---|
| US Stock Market | 52.00% |
| Global ex-US Stock Market | 28.00% |
| Total US Bond Market | 16.00% |
| Global Bonds (Unhedged) | 4.00% |
| Save portfolio » | |
| Asset Class | Allocation |
|---|---|
| US Stock Market | 13.00% |
| Global ex-US Stock Market | 7.00% |
| Total US Bond Market | 64.00% |
| Global Bonds (Unhedged) | 16.00% |
| Save portfolio » | |
| Purpose | Type | Starts In | Ends In | Frequency | Times | Total | Success |
|---|---|---|---|---|---|---|---|
| Career Savings | Contribute $1,500 | 1 month | 35 years | Monthly | 420 | $630,000 | 100.00% |
| College | Withdraw $40,000 | 12 years | 15 years | Annually | 4 | -$160,000 | 100.00% |
| Retirement Spending | Withdraw $3,500 | 35 years | 49 years and 11 months | Monthly | 180 | -$630,000 | 98.21% |
| Total is the sum of expected cashflows in present dollars | |||||||
| 10th Percentile | 25th Percentile | 50th Percentile | 75th Percentile | 90th Percentile | |
|---|---|---|---|---|---|
| Time Weighted Rate of Return (nominal) | 4.52% | 5.60% | 6.76% | 7.92% | 8.92% |
| Time Weighted Rate of Return (real) | 1.93% | 3.00% | 4.15% | 5.30% | 6.26% |
| Portfolio End Balance (nominal) | $1,503,703 | $3,201,047 | $6,071,994 | $10,613,985 | $16,582,007 |
| Portfolio End Balance (real) | $429,863 | $928,310 | $1,763,927 | $3,096,374 | $4,845,342 |
| Maximum Drawdown | -55.46% | -43.24% | -34.32% | -28.28% | -22.89% |
| Maximum Drawdown Excluding Cashflows | -52.81% | -44.07% | -35.94% | -30.74% | -24.05% |
| Safe Withdrawal Rate | 2.69% | 3.75% | 5.15% | 6.82% | 8.44% |
| Perpetual Withdrawal Rate | 1.91% | 2.92% | 3.99% | 5.04% | 5.90% |
| 9821 portfolios out of 10000 simulated portfolios (98.21%) survived all withdrawals. | |||||
| Name | US Stock Market | Global ex-US Stock Market | Total US Bond Market | Global Bonds (Unhedged) | Inflation | CAGR | Expected Annual Return | Annualized Volatility |
|---|---|---|---|---|---|---|---|---|
| US Stock Market | 1.00 | 0.81 | 0.10 | 0.44 | 0.00 | 9.44% | 10.71% | 15.18% |
| Global ex-US Stock Market | 0.81 | 1.00 | 0.12 | 0.58 | 0.00 | 4.66% | 6.18% | 16.92% |
| Total US Bond Market | 0.10 | 0.12 | 1.00 | 0.59 | -0.18 | 4.46% | 4.54% | 3.89% |
| Global Bonds (Unhedged) | 0.44 | 0.58 | 0.59 | 1.00 | -0.05 | 4.90% | 5.19% | 7.48% |
| Inflation | 0.00 | 0.00 | -0.18 | -0.05 | 1.00 | 2.50% | 2.51% | 1.20% |
| Asset correlations and return vs. risk statistics are based on monthly returns from Jan 1992 to Dec 2022 | ||||||||
| Percentile | 1 Year | 3 Years | 5 Years | 10 Years | 15 Years | 20 Years | 25 Years | 30 Years | 40 Years | 50 Years |
|---|---|---|---|---|---|---|---|---|---|---|
| 10th Percentile | -9.79% | -3.82% | -1.45% | 1.41% | 2.53% | 3.13% | 3.67% | 3.97% | 4.37% | 4.52% |
| 25th Percentile | -1.23% | 2.03% | 3.20% | 4.52% | 5.07% | 5.36% | 5.56% | 5.70% | 5.66% | 5.60% |
| 50th Percentile | 13.38% | 8.57% | 8.17% | 7.85% | 7.72% | 7.66% | 7.64% | 7.54% | 7.10% | 6.76% |
| 75th Percentile | 18.26% | 14.15% | 12.61% | 11.05% | 10.27% | 9.85% | 9.62% | 9.32% | 8.48% | 7.92% |
| 90th Percentile | 23.59% | 18.09% | 16.02% | 13.64% | 12.51% | 11.80% | 11.32% | 10.84% | 9.71% | 8.92% |
| Return | 1 Year | 3 Years | 5 Years | 10 Years | 15 Years | 20 Years | 25 Years | 30 Years | 40 Years | 50 Years |
|---|---|---|---|---|---|---|---|---|---|---|
| >= 0.00% | 74.69% | 80.70% | 86.08% | 94.02% | 96.82% | 98.37% | 99.18% | 99.58% | 99.92% | 99.97% |
| >= 2.50% | 67.97% | 73.47% | 77.89% | 85.59% | 90.09% | 92.90% | 94.84% | 96.37% | 97.89% | 98.97% |
| >= 5.00% | 67.97% | 64.84% | 66.86% | 72.05% | 75.46% | 78.00% | 80.39% | 82.05% | 83.63% | 84.71% |
| >= 7.50% | 64.36% | 54.85% | 53.73% | 53.03% | 52.15% | 51.91% | 51.74% | 50.65% | 42.46% | 34.03% |
| >= 10.00% | 54.46% | 43.43% | 39.35% | 32.39% | 27.23% | 23.73% | 20.74% | 16.82% | 7.55% | 2.55% |
| >= 12.50% | 54.46% | 32.12% | 25.52% | 15.80% | 10.08% | 6.32% | 4.21% | 2.69% | 0.24% | 0.01% |
| Loss | Loss Probability Excluding Cashflows | Loss Probability Including Cashflows | ||
|---|---|---|---|---|
| Within Time Period | End of Time Period | Within Time Period | End of Time Period | |
| >= 2.50% | 67.10% | 0.03% | 28.70% | 2.05% |
| >= 5.00% | 53.24% | 0.03% | 22.25% | 2.03% |
| >= 7.50% | 47.59% | 0.03% | 16.04% | 2.03% |
| >= 10.00% | 43.39% | 0.03% | 15.54% | 2.03% |
| >= 12.50% | 38.59% | 0.03% | 9.14% | 2.03% |
| >= 15.00% | 36.05% | 0.03% | 5.62% | 2.02% |
| >= 17.50% | 25.73% | 0.03% | 5.34% | 2.02% |
| >= 20.00% | 21.54% | 0.03% | 5.11% | 2.02% |
| >= 22.50% | 19.61% | 0.03% | 2.63% | 2.02% |
| >= 25.00% | 15.57% | 0.02% | 2.55% | 2.02% |
| >= 27.50% | 13.69% | 0.02% | 2.31% | 2.02% |
| >= 30.00% | 11.93% | 0.02% | 2.28% | 2.02% |
| >= 32.50% | 10.27% | 0.02% | 2.17% | 2.00% |
| >= 35.00% | 7.75% | 0.02% | 2.15% | 1.99% |
| >= 37.50% | 6.29% | 0.02% | 2.11% | 1.99% |
| >= 40.00% | 5.08% | 0.01% | 2.06% | 1.97% |
| Loss is measured against the original portfolio balance. | ||||