homie

Future outcomes are always uncertain. Each year constitutes a random throw of the dice (in your case, stock price and interest rates) and the geometric rate of return can vary widely depending on market fluctations. Sometimes, however, a client will have a predetermined withdrawal rate in dollars. In a down market, the withdrawal can severely impact portfolio performance.

Monte Carlo analysis attempts to capture the terminal value of a portfolio under thousands of different outcomes.

- Robert



Edited 1 time(s). Last edit at Wednesday, February 24, 2010 at 07:37PM by Robert A.