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Financial Goals

Portfolio Monte Carlo Simulation Overview

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:

  • Historical Returns - Simulate future returns by randomly selecting the returns for each year based on available historical returns
  • Forecasted Returns - Simulate future returns based on any forecasted mean and standard deviation of assets
  • Statistical Returns - Simulate future returns based on the mean, volatility and correlations of portfolios assets
  • Parameterized Returns - Simulate future returns based on the specified statistical distribution (single stage only)

Simulation Model Configuration
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Start Portfolio
Allocation
Mean
Volatility
Asset 1
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Asset 2
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Asset 3
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Asset 4
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Asset 5
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Asset 6
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Asset 7
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Asset 8
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Asset 9
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Asset 10
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Total
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End Portfolio
Allocation
Mean
Volatility
Asset 1
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Asset 2
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Asset 3
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Asset 4
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Asset 5
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Asset 6
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Asset 7
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Asset 8
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Asset 9
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Asset 10
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Total
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Goal #1
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periods
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Starts
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Goal #2
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periods
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Frequency
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Goal #3
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periods
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