Monte Carlo Simulator: 50 years of real historical data

🗂️ Custom Scenarios

The four Custom Scenarios at the top of the simulator are complete, saveable configurations — profile, allocation, capital, contributions, income and rebalancing — ready to recall with one click. Load a card to apply its parameters and run the simulation straight away; freely adjust the controls after loading it; save the current configuration in one of 4 slots; rename each scenario so you can recognise it at a glance (e.g. "Retirement at 60"). Your scenarios stay saved to your account (or to your browser if you're not logged in) on every visit.

🎯 Set up your profile

The profile lets the Evaluation Card judge the results against your actual goals, not just absolute performance.

• Objective — Capital Protection, Capital Growth, Income or Drawdown
• Risk Tolerance — from Low to High, some values automatically locked based on the objective
• Time Horizon — should match the duration of the simulation: short horizons combined with a high equity share are penalised
• Basic mode — three simplified scenarios with sensible default values, ideal for getting started
• Advanced mode — statistical percentiles P15/P50/P85 with every control visible and editable

📐 What to explore with the simulator

• Optimal allocation — the Equities/Cash split best suited to your profile
• Effect of starting capital and monthly purchases — how compound growth turns small, regular contributions into significant wealth
• Sustainable income — a periodic withdrawal and how many years the portfolio can support it
• Impact of rebalancing — how buy/sell thresholds (typically −5% and +10% of target) improve results by exploiting volatility

🗃 Simulation models

The simulator uses 10,000 iterations across more than 50 years of historical data. Three models are available:

• Annual bootstrap — resamples one-year blocks, the closest to real market dynamics, recommended as a starting point
• Monthly bootstrap — resamples one-month blocks, more variable scenarios, useful for testing robustness under extreme conditions
• Real data — the actual historical sequence for a specific period (e.g. the dot-com crash, 2008, post-pandemic), a deterministic, non-probabilistic scenario

🎯 The three scenarios: P15, P50, P85

The simulator ranks the results of the 10,000 iterations and presents them as three reference scenarios. The Median Scenario (P50) is the result that half the simulations beat and half don't reach — the main reference point, neither optimistic nor pessimistic. The Cautious Scenario (P15) is reached only by the worst 15% of simulations: an unfavourable market, to be used as a "fallback plan" — your portfolio needs to hold up there too. The Favourable Scenario (P85) is beaten only by the best 15%: useful for understanding upside potential, but not to be used as a basis for decisions.

📈 Growth (CAGR)

CAGR (Compound Annual Growth Rate) expresses the portfolio's average annual compound return. A 7% CAGR over 20 years turns £100,000 into roughly £387,000 — not £240,000 as a simple return would — that's the "snowball" effect of compound interest. Historical reference figures (MSCI World in EUR, 1970–2024): a 100% equity portfolio returns roughly 10% nominal (~7% real, net of inflation); 70% equities/30% Cash roughly 7–8%; 50/50 roughly 5–6%.

✅ Success probability

Shows the percentage of simulations in which the portfolio doesn't run out of capital during the simulated period — the most important metric for anyone in the income or drawdown phase. 100% means all simulations end with positive capital; 85–99% is an excellent safety margin; 70–84% is acceptable, consider reducing the withdrawal slightly; below 70% the risk of running out of capital is significant. In the accumulation phase (no withdrawals), it's typically close to 100% over long horizons.

📉 Volatility

Measures the average size of annual swings. A value of 15% means that in a "normal" year the portfolio can move by roughly ±15% relative to its expected value. Below 8% is low (lots of Cash or diversification); 8–15% is the average for an MSCI World + Cash strategy with 50–80% equities; above 15% is high (equity concentration above 80%). Volatility isn't "the enemy": for someone with a long horizon, it's the price paid for higher returns — it only becomes a problem if it leads to selling at the wrong moment.

⬇️ Max drawdown

Shows the largest fall from the previous peak in the median scenario: "how much could the portfolio lose at its worst point before recovering?" A 35% drawdown means going from £100,000 to roughly £65,000 before recovering — a recovery that can take anywhere from 2 to 5+ years. Typical figures: 100% equities up to −50% (2008 crisis) or −45% (dot-com 2000); 70% equities −25/−35%; 50% equities −15/−25%; 30% equities −8/−15%.

💰 Final capital and cumulative income

The final capital is the portfolio's value at the end of the simulated period, across the three scenarios. For someone in the accumulation phase, it's the main result; for someone in drawdown or drawing income, it should be read alongside cumulative income — the total sum withdrawn over the period.

🎓 The Evaluation Card and AI Coach

The Evaluation Card assigns a Score from 0 to 100 measuring how consistent the results are with your chosen profile, not just absolute performance: Growth (up to 25pt), Success (up to 20pt), Volatility (up to 10pt), Capital (up to 15pt) and Profile Match (up to 30pt). The AI Coach — powered by Claude by Anthropic — reads the results and suggests concrete actions (e.g. "reduce the equity share to 60%"). It doesn't generate automatically: it's triggered with the Generate AI evaluation button after each simulation.

The AI Coach provides educational and orientation information only; it does not constitute personalised financial advice.