Frequently asked questions
Basic explanations of the simulator, portfolio inputs, and results.
Getting started
What does the simulator do?+
It simulates portfolio wealth under a selected investment and cash-flow plan. The current model generates 10,000 possible paths rather than assuming one future return.
What is a Monte Carlo simulation?+
A Monte Carlo simulation generates many possible outcomes using a statistical model. Here, each run produces 10,000 portfolio paths.
What do stocks and bonds mean here?+
The portfolio combines U.S. stocks, international stocks, and U.S. corporate bonds. The stock and bond shares can change over the selected horizon.
Why are there starting and ending allocations?+
The model allows the stock-bond allocation to change gradually over time. For example, a portfolio can start with 80% stocks and end with 60% stocks.
Understanding the results
What does portfolio survival mean?+
It is the share of simulated paths in which portfolio wealth remains above zero through the full time horizon.
Does a 90% survival result mean a 90% guarantee?+
No. It means the portfolio survived in 90% of the scenarios generated by this model under the selected assumptions. Actual market outcomes can differ.
What is median ending wealth?+
It is the midpoint of final wealth across the simulations: half of the final values are below it and half are above it.
What are the lower and upper outcomes?+
The results page uses the 10th and 90th percentiles of final simulated wealth. They summarize the spread of model outcomes; they are not minimum and maximum possible wealth.
What does portfolio depletion mean?+
Portfolio depletion means simulated wealth reaches zero before the selected horizon ends. The research code also refers to this as ruin.
Model and use
What market factors are in the current model?+
The complete model uses market volatility, the stock valuation measure, Moody's BAA corporate bond rate, and the 10-year minus 3-month Treasury spread.
What is the stock valuation measure?+
It is a model factor used in the stock-return equation. Technical details belong in the methodology documentation.
Is this financial advice?+
No. The simulator is an educational and research-based scenario tool. It does not provide individualized investment recommendations.
Are the results guaranteed?+
No. Results are hypothetical outcomes generated by the statistical model.