Good question, however, so much will change over that period including income needs as you age.I'm doing Monte Carlo simulation of my portfolio for each age for a total of 29 years - 10,000 runs for each year. For each age, I calculate the number of cases for which my total portfolio drops below zero (i.e., I run out of money). This is what I get:
# of cases with portfolio dropping below 0:
years 1-20: 0
year 21: 5
year 22: 16
year 23: 37
year 24: 121
year 25: 286
year 26: 580
year 27: 1054
year 28: 1741
year 29: 2591
TOTAL # of cases: 6431
Is the success rate of my portfolio calculated as (29*10,000 -6431)/(29*10,000) = 97.8%?
Pralana and other programs report the success rate. Is it how these programs calculate the success rate?
Thanks in advance!
What made you decide to model it this way?
For MC, I just use 10-15 & 35 year modeling segments and back test 10 year distressed historical periods from various starting points like the .com crash, 2008 crash, and 2022 bond route.
I’m not judging, just trying to understand if there is another way I should use the tool?
John
Statistics: Posted by itnetpro — Mon Jan 20, 2025 7:49 pm — Replies 3 — Views 163