Hexanova
Dryer sheet aficionado
- Joined
- Mar 10, 2013
- Messages
- 28
Question for the collective...
I've developed a personal spreadsheet over the last few years that uses monte carlo simulation to model different return scenarios and variance assumptions. I used monte carlo as part of the engineering design process while I was working, so I have experience with it...and I'm a spreadsheet nerd.
My question is how do I include inflation and assumed variance in my model?
- Do I include it simply as another variance that erodes my overall returns assumption?
- Do I include it as an erosion to portfolio withdrawal only? OR
- Do I include it as an inflation added to my returns calculation only? OR
- Some combo/something else I'm missing...?
Hopefully that makes sense. Thanks.
I've developed a personal spreadsheet over the last few years that uses monte carlo simulation to model different return scenarios and variance assumptions. I used monte carlo as part of the engineering design process while I was working, so I have experience with it...and I'm a spreadsheet nerd.
My question is how do I include inflation and assumed variance in my model?
- Do I include it simply as another variance that erodes my overall returns assumption?
- Do I include it as an erosion to portfolio withdrawal only? OR
- Do I include it as an inflation added to my returns calculation only? OR
- Some combo/something else I'm missing...?
Hopefully that makes sense. Thanks.