American Investment Services, Inc.

Disciplined, Diversified, & Cost Effective

Introduction to Monte Carlo Simulation

By /

Most retirement “calculators” rely on linear assumptions of the portfolio rate of return.  The problem with this approach is that in reality returns are never consistent from year-to-year.  For instance a portfolio provide an average annual return of 8.0% over a certain period time.  The sequence of the individual returns will have a dramatic affect on the portfolios final value.  Monte Carlo simulation is a technique that attempts to overcome this shortcoming by randomizing the sequence of historical returns and projecting a range of probable outcomes.  This document provides an introduction to Monte Carlo simulation for retirement planing.

American Investment Services, Inc. (AIS) is an SEC Registered Investment Adviser* founded in 1978.

AIS is a wholly-owned subsidiary of:

Facebook-f Linkedin

Contact AIS

Business Continuity Disclosure

Privacy Policy

Disclaimer

*Registration with the U.S. Securities and Exchange Commission does not imply a certain level of skill or training.

The information provided does not constitute investment or tax advice and it should not be relied on as such. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. It should not be considered a solicitation to buy or an offer to sell a security. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and AIS shall have no liability for decisions based on such information.

Any mention of commercial products or reference to commercial organizations is for information only; it does not imply recommendation or endorsement by AIS nor does it imply that the products mentioned are necessarily the best available for the purpose.