Monte Carlo Simulation for Wealth Planning in Excel - Part 2

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Continuing from my Part 1 video:    • Monte Carlo Simulation for Wealth Pla...  

Link to my LinkedIn article:   / monte-carlo-simulation-wealth-planning-exc...  

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?

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