Monte Carlo implementation in FRP

A retirement planning tool is only as good as its assumptions and inputs. Share your thoughts or ask questions about the internals of the simulation, built in planner assumptions, or planner inputs.
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GDK
Posts: 15
Joined: Wed Jun 07, 2017 10:29 pm

Monte Carlo implementation in FRP

Post by GDK » Sun Jan 05, 2020 5:48 pm

Hi Jim,

I believe the documentation says that FRP performs 10,000 realizations. I think I've read in this forum that a new realization is drawn for each FRP plan year. Does that therefore mean that FRP performs 10,000 realizations for each plan year, and a 30 year FRP plan would therefore be the product of 300,000 realizations?

Thanks again for the great tool!

jimr
Posts: 556
Joined: Thu Feb 28, 2008 6:48 pm

Re: Monte Carlo implementation in FRP

Post by jimr » Sun Jan 05, 2020 6:05 pm

The simulation runs 10,000 iterations or paths through the plan and it does draw a new realization for the return variable for each plan year of each path.

So you are correct that a 30 year plan would be the product of 300,000 realizations.

GDK
Posts: 15
Joined: Wed Jun 07, 2017 10:29 pm

Re: Monte Carlo implementation in FRP

Post by GDK » Sun Jan 05, 2020 8:27 pm

Got it, thanks Jim!

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