Monte Carlo

[al4trade]

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

Thanks for your thoughts!

 

[razztazz]

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)