Monte Carlo enhancements has been added to RetireUp Detail
Starting on the plan tab, you can select the gear symbol. You now have the option to show the Plan Probability percentage. There are also new tabs at the top for Portfolio Analysis and Monte Carlo paths.
After selecting Portfolio Analysis, you can compare the Efficiency of the starting portfolio, the ending portfolio (this will appear only if you have moved money under the accounts tab), and 5 different benchmark index funds options.
The nest drop down under the view tab is the Stress Test. Here you will see how the starting portfolio, ending portfolio, and benchmarks have performed under stressful historical markets. If some of the client's holdings were not yet available, there will be a blank space where the starting and/or the ending portfolio return graphs would be.
The next drop down under the view tab is the Back Test. You can compare cumulative returns looking back the last 3 months, 6 months, 1 year, 3 years, 5 years, or all time (if some holdings are too new, there will be limitations on the timeline). You can use your cursor to hover over each month to see the cumulative returns by month and year.
The last drop down under the view tab is the Outcomes. This shows the starting portfolio, ending portfolio, and the benchmark hypothetical balances growing from today until the last spouse has passed away. When you see an "i", you can hover your cursor over it to get more information.
The last enhancement is the Monte Carlo paths illustrating a very optimistic, this scenario, and a very pessimistic scenario. Hovering your mouse over the graph shows the hypothetical balances each year from today until the last spouse passes away.
As illustrated below, making changes to a plan can affect the income stability ratio, risk value, and plan probability. In this case, money was moved from a 40/60 portfolio into a fixed indexed annuity and another account moved money into a lower risk portfolio.
If you are interested in upgrading from Simple to Detail, please email us at
How are the hypothetical returns created?
Portfolio Returns create a hypothetical yearly sequence of returns for each underlying
holding or index within a scenario. These individual return sequences are generated
from a combination of historical covariant volatility as well as historical beta to the
broad market equity index for each holding. The Portfolio Returns are used to derive
a hypothetical future sequence of returns, however, they also allow for more precise
control over each specific holding within an asset or an annuity.
The projected return sequence shown in this hypothetical scenario is one of the
thousands of return sequences run in the Monte Carlo analysis to determine the
probability that this portfolio will meet your goals and expenses. The return sequence
is better than 6% and worse than 94% of the return sequences ran during the analysis.
This sequence is therefore considered VERY PESSIMISTIC since 94% of the other
sequences ran in the Monte Carlo analysis resulted in a better outcome for your plan.
The graph below shows the hypothetical outcomes of the Monte Carlo analysis for this
scenario as well as the best and worse scenario ran in the analysis. All other outcomes
lie between these scenarios. The plan probability is the percent of return sequences
ran in the Monte Carlo analysis that resulted in meeting your goals and expenses every
year of the plan.