What are reasonable "mean total portfolio returns," "variability" and "inflation rate" numbers for the Monte Carlo calculations?
Thanks for your thoughts!
For mostly semi-objective reasons:
I use 4% for inflation. That's rounded up from the historic 3.5% or so inflation rate
Variability ( I guess that's standard deviation) I use "6"
The* S&P500 historical, last I checked on this stuff was 15-16. I just cut it in half due to my asset allocation, then brought it down a litte more because I intend to swap out during signifcant downturns thus flattening things out a bit. (No discussion of market timing here)
Returns, the last time I ran through this I think I used 2% real return, just because I figure that should be easy enough to to achieve. (3% should be fairly easy too)