Feeling Stressed Financially? A “Monte Carlo” Simulation May Be Able To Help.

Feeling Stressed Financially? A “Monte Carlo” Simulation May Be Able To Help.

A volatile economy and socio-political landscape can be stressful to endure, especially when making financial decisions for your future.


A common reason to have a financial advisor is to help ensure that the financial decisions you make today will support you and your priorities into retirement and through uncertainty. A quick Google search will provide you with hundreds of “retirement calculators” to try and assess what your retirement plan requires, but these overly simplistic, straight-line models may fail to address the nuances nor create the confidence needed for a longitudinal investment strategy.


Enter the Monte Carlo simulation.


A Monte Carlo simulation runs a series of 1,000 iterations of your retirement strategy with randomly generated returns based on your investment decisions. These trials “stress test” your retirement plan by simulating outcomes ranging from average market conditions to well into the extremes. The idea is that if your retirement strategy can succeed across even the most unlikely of economic scenarios, you can be confident in your plan succeeding overall.

The output of the model is expressed as a simple percentage: “in X% of simulations, your retirement expectations have been met by your strategy.” Retirement plans scoring 82% or higher are generally considered passing, whereas lower scores indicate a need to rethink assumptions and change inputs. Read differently, your Monte Carlo score suggests that you can be X% confident in the merit of your investment strategy based upon the simulation.

When first introduced to us, new clients sometimes find themselves with lower-than-anticipated scores, meaning their retirement plans may not perform the way they were designed to. But information is your best defense against disappointment – with that knowledge in hand, our clients are equipped to pivot their strategies to score better in the future.

At Axias, we use tools like this to give our advisory clients two critical benefits: statistical support of the retirement path you are on now, and the experience to shift strategies to create better outcomes in the future. The sooner we understand your trajectory, the faster we can provide you with comfort in your plan.


Think a Monte Carlo simulation would be helpful to you? Visit us as axiaswa.com to arrange a consultation.



*For Educational Purposes Only – Not to be relied upon as financial advice.  Investing involves risk, including loss of value, and no investing strategy can assure a profit. The projections or other information generated by Monte Carlo analysis tools regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.

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