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Distribution of returns
Posted: Thu Jul 02, 2009 12:45 am
by plb
Does the program use returns that are normally distributed, producing a symmetrical distribution; or does it instead assume that return relatives are lognormally distributed, producing a distribution that is skewed to the right?
Also, are withdrawals taken at the beginning of the year or at the end of the year?
Re: Distribution of returns
Posted: Fri Jul 03, 2009 9:06 pm
by jimr
Hello,
Thanks for trying out the planner and for your questions. Please see answers below...
plb wrote:Does the program use returns that are normally distributed, producing a symmetrical distribution; or does it instead assume that return relatives are lognormally distributed, producing a distribution that is skewed to the right?
The simulation assumes returns are normally distributed and thus generated returns will be symmetrical around the average return.
Also, are withdrawals taken at the beginning of the year or at the end of the year?
Withdrawals are taken at the beginning of the year and portfolio growth is computed at the end of the year.
If you have other questions, be sure to post again...
Jim