Settings

Overview

You can “tune” the simulations to account for bear/bull markets, inflation, rebalancing, withdrawals, and more.

Future Simulation Settings

Simulations

Simulation Years: The number of years into the future to run each portfolio simulation, the default is 10 years.

Monte Carlo Runs: How many individual simulations to run, the default is 1000.

Sampling Methods

Sample Period: Is very important as it isn’t just the length of time that is important, but what happened during the sample period. For example, if you picked the 2007-2008 time period, then the modeling for the financials would reflect the financial crisis. If you picked the period from 2017-2021, it is a period where tech stocks have significantly outperformed the S&P 500. Including the year 2020 in the sample period would include the great crash and recovery from the pandemic. The sample period allows you to choose the historical market you want to use for the simulation.

Bear vs Bull (%): Over a 100-year history the stock market has risen 63% of months. During the period covered by Stock Rover (1/1/2007 to present), positive months averaged 74% (through the end of 2021). In recent years (through 2021) the market has been very bullish.

Recalibrating this will affect sampling, specifically the percentage of time a month from the historical period with a positive return for the S&P 500 is randomly selected, versus randomly selecting a month with a negative return for the S&P 500.

Inflation%: The inflation rate reduces the returns in order to show the results in inflation-adjusted amounts (i.e. in today’s dollars). Over approximately 100 years, the average annual inflation rate has been 3.24%. In simulations, the inflation rate is applied evenly across the entire period.

Asset Returns: Choose a proxy for the performance of any unpriceable holdings that are tracked as portfolio assets. For example, if you hold bonds, you might select an ETF like BND as a proxy. Leave this field blank to completely exclude Assets from simulations.

New Listings: Equities that started trading a few years ago will not have complete historical data points. This controls what value is used for periods when an actual return is not available. You can use Sector or S&P 500 returns.

Exclusions: Excluded equities are treated as if they were not part of your portfolio. This can be helpful for analyzing “What If” scenarios or for removing a volatile position that dominates future returns.

Rebalancing

Frequency: Frequency of Rebalancing – Never, Quarterly, or Yearly

Method: Rebalancing will redistribute the portfolio funds to match their current allocations as a percent of the portfolio(s)

  • Asset Category and Stock Sector
  • Asset Category
  • Stock Sector

Withdrawals (or Contributions)

Amount: This amount will be subtracted from the portfolio using an equal percent per holding. Use a negative value to simulate portfolio contributions.

Frequency: The frequency for withdrawals (or contributions). Withdrawals occur at the end of the period, after gains or losses.

Start Date: Withdrawals will start the first Month, Quarter, or Year after this date, depending on the selected frequency.


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