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 | 98.40% |
| 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) | 4.49% | 5.59% | 6.77% | 7.91% | 8.95% |
| Time Weighted Rate of Return (real) | 1.90% | 2.99% | 4.15% | 5.29% | 6.30% |
| Portfolio End Balance (nominal) | $1,474,244 | $3,170,785 | $6,011,593 | $10,465,576 | $16,632,190 |
| Portfolio End Balance (real) | $424,555 | $909,374 | $1,745,996 | $3,069,362 | $4,883,030 |
| Maximum Drawdown | -55.97% | -43.85% | -34.43% | -28.37% | -22.86% |
| Maximum Drawdown Excluding Cashflows | -52.93% | -43.93% | -35.93% | -30.74% | -24.34% |
| Safe Withdrawal Rate | 2.71% | 3.75% | 5.14% | 6.78% | 8.41% |
| Perpetual Withdrawal Rate | 1.87% | 2.91% | 3.99% | 5.03% | 5.93% |
| 9840 portfolios out of 10000 simulated portfolios (98.40%) 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% | -3.70% | -0.95% | 1.38% | 2.51% | 3.16% | 3.60% | 3.95% | 4.31% | 4.49% |
| 25th Percentile | -1.23% | 2.67% | 3.48% | 4.55% | 5.07% | 5.34% | 5.53% | 5.72% | 5.67% | 5.59% |
| 50th Percentile | 13.38% | 8.65% | 8.32% | 7.78% | 7.71% | 7.64% | 7.65% | 7.49% | 7.08% | 6.77% |
| 75th Percentile | 18.26% | 14.18% | 12.58% | 10.88% | 10.22% | 9.85% | 9.61% | 9.33% | 8.50% | 7.91% |
| 90th Percentile | 23.59% | 18.15% | 15.88% | 13.54% | 12.39% | 11.73% | 11.32% | 10.84% | 9.74% | 8.95% |
| Return | 1 Year | 3 Years | 5 Years | 10 Years | 15 Years | 20 Years | 25 Years | 30 Years | 40 Years | 50 Years |
|---|---|---|---|---|---|---|---|---|---|---|
| >= 0.00% | 74.16% | 82.01% | 87.68% | 93.89% | 97.02% | 98.39% | 99.12% | 99.64% | 99.97% | 100.00% |
| >= 2.50% | 67.68% | 75.45% | 79.15% | 86.04% | 90.07% | 92.78% | 94.57% | 96.06% | 98.02% | 99.01% |
| >= 5.00% | 67.68% | 66.51% | 67.87% | 71.88% | 75.55% | 77.72% | 79.67% | 82.23% | 83.25% | 84.30% |
| >= 7.50% | 64.71% | 55.77% | 54.73% | 52.28% | 52.17% | 51.73% | 52.02% | 49.89% | 42.06% | 33.11% |
| >= 10.00% | 55.32% | 43.71% | 39.84% | 31.48% | 26.84% | 23.27% | 20.84% | 17.43% | 7.66% | 2.33% |
| >= 12.50% | 55.32% | 32.73% | 25.50% | 14.82% | 9.61% | 6.37% | 4.37% | 2.55% | 0.23% | 0.00% |
| 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% | 66.03% | 0.00% | 27.97% | 1.95% |
| >= 5.00% | 51.53% | 0.00% | 21.46% | 1.92% |
| >= 7.50% | 45.56% | 0.00% | 15.38% | 1.91% |
| >= 10.00% | 41.59% | 0.00% | 14.78% | 1.91% |
| >= 12.50% | 36.88% | 0.00% | 8.68% | 1.89% |
| >= 15.00% | 34.81% | 0.00% | 5.73% | 1.89% |
| >= 17.50% | 25.64% | 0.00% | 5.58% | 1.88% |
| >= 20.00% | 21.26% | 0.00% | 5.36% | 1.87% |
| >= 22.50% | 19.10% | 0.00% | 2.50% | 1.87% |
| >= 25.00% | 15.36% | 0.00% | 2.38% | 1.87% |
| >= 27.50% | 13.68% | 0.00% | 2.13% | 1.85% |
| >= 30.00% | 11.94% | 0.00% | 2.11% | 1.84% |
| >= 32.50% | 10.29% | 0.00% | 2.01% | 1.84% |
| >= 35.00% | 7.37% | 0.00% | 1.96% | 1.82% |
| >= 37.50% | 5.94% | 0.00% | 1.92% | 1.80% |
| >= 40.00% | 4.79% | 0.00% | 1.91% | 1.79% |
| Loss is measured against the original portfolio balance. | ||||