Monte Carlo Simulation for Wealth Planning in Excel - Part 2

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Continuing from my Part 1 video: https://youtu.be/R1PFb5B4zZo

Link to my LinkedIn article: https://www.linkedin.com/pulse/monte-carlo-simulation-wealth-planning-excel-fabian

Imagine you have a 70-year old client with a portfolio valued at $2,000,000. As her wealth manager, you propose a mix of asset classes:

1) Government bonds (risk-free): with an expected return of 4% per annum.

2) Equities: with an expected return of 12% and a standard deviation of return of 30%.

Based on capital market expectations and the client's risk profile, a proposed allocation is 40% invested in equities and the remaining 60% goes to government bonds.

Your client indicated that she would like to withdraw $180,000 out of her account every year (let's assume the withdrawal happens at the end of the year). She would like to donate $100,000 to charity at the age of 80 (i.e. her investment horizon is 10 years).

What are her chances of achieving her objective?

More resources on financial modeling on www.fabianmoa.com.

Видео Monte Carlo Simulation for Wealth Planning in Excel - Part 2 канала Fabian Moa, CFA, FRM, CTP, FMVA