monte carlo

How does Monte Carlo function use historical data

I am interested in understanding how the MC function uses data and does its calculations. Namely, is the historical range used to establish a range of possible returns for the specific asset class (ie -40% to +30%) and to randomly pick a figure from within the historical range to apply to the asset amount from the prior year, independently of the prior years returns.

Or, does is the range of possible returns for a given year, influenced by the prior years returns?

Suggested Consumption with and without Monte Carlo

I'm hoping this is something simple I am overlooking. With the profile I have setup I just noticed something I can't explain. I can run an analysis with just Economic-Based Planning. I then activate the Monte Carlo option, with no other changes, and run another analysis. The Suggested Consumption Table is noticeably different between these two runs. The Current and Suggested Consumptions are lower by about 10% for the Monte Carlo active run. The Suggested Savings is lower by about 10% as well. I was expecting these to be identical between runs. I am missing something here?

Questions on Monte Carlo Changes in 2.36 and 2.37.

After reading through the release notes in 2.36 and 2.37 and looking at my Monte Carlo reports after recently installing 2.37.2 I have the following questions I hope you can answer:

1. Looks like the Distribution and Range reports were eliminated as they do not appear on a report run and the User manual no longer describes them. The release notes say reports were simplified, but not eliminated. Why were they eliminated?

Why are annual discretionary spending recommendations so much lower than the average standard of living forecast from the monte carlo simulations?

Why are annual discretionary spending recommendations so much lower than the average standard of living forecast from the monte carlo simulations?

For example, from the same report. Monte Carlo set with spend cautiously. All assets invested in Vanguard LifeStrategy Growth Fund (80% equities, 20% bonds)

- Annual discretionary spending recommendation (for all years): $102,187
- Monte Carlo result, Low Trajectory Average Standard of Living: $130,054
- Monte Carlo result, Median Trajectory Average Standard of Living: $160,998

Thanks

Monte Carlo bug in latest version?

My Standard of Living results have previously made sense, or at least I didn't notice that they didn't.

The recent Monte Carlo change has my standard of living often better with a Very Low Return vs. a Low Return. Every now and then, a High Return has a better standard of living than a Very High Return. I do have a significant bond allocation, if that matters.

It makes it difficult to root for an outcome :-)

Seeming inconsistency in Monte Carlo reports

I've specified conservative spending in my Monte Carlo setup. Everything looks fine in the non-MC report. Everything seemingly looks great in the MC report - all graphs go from something fairly horizontal at the Specified Mean Real Return to sloping dramatically upward for the 95th percentile. EXCEPT for the MC reports regarding Regular Assets.

variance in monte carlo results

Every time I run the monte carlo simulation I get different results - I assume this is expected since the random numbers used to generate the results are different on each run. However I find the differences are significant enough that I cant rely on the results for future retirement planning. After 20 years one run generates a 50th percentile living standard of 114K per year, a second rerun of the same inputs generates a 50th percentile living standard of 122K per year. I can imagine that this is not a bug, but is just the way monte carlo simulations work.

Are there plans to add more asset classes?

Are there any plans to add more asset classes to the "build portfolios" portion of the Monte Carlo planning method? For those of us who do not have access to Dimensional Funds, the options are very limited. I'd like to have access to historical data for Large Cap Value, Large Cap Core, Large Cap Growth, Mid Cap Value, Mid Cap Core, Mid Cap Growth, Small Cap Value, Small Cap Core, Small Cap Growth. I'd also like to see separate options for short, intermediate, long term bond funds in both the government and corporate sectors. Thanks!

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