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Monte Carlo
Old 08-13-2006, 04:30 PM   #1
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Monte Carlo

What are reasonable "mean total portfolio returns," "variability" and "inflation rate" numbers for the Monte Carlo calculations?

Thanks for your thoughts!

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Re: Monte Carlo
Old 08-13-2006, 04:56 PM   #2
Thinks s/he gets paid by the post
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Re: Monte Carlo

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)

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