Windham Portfolio Advisor
By simulating growth over time, Windham helps you evaluate the likelihood of meeting future goals and commitments. Windham’s cash flow simulations account for inflation and planned contributions and withdrawals. Projections are expressed in terms of total wealth and as an annuity.
- Generate projections of future portfolio value
- Measure the effects of inflation and periodic contributions or withdrawals
- Quantify the likelihood of shortfall
The most commonly used simulation method, Monte-Carlo simulation, is a multi-variate normal model to simulate asset returns using the chosen return and risk estimation methods; the equilibrium return estimate, and blended quiet/turbulent risk estimate for example.
Bootstrap simulation offers the advantage of using actual empirical experience to simulate future scenarios capturing non-normal characteristics such as fat-tails. Whereas Monte-Carlo allows use of the turbulence risk estimate, the Bootstrap method can only assume the historical risk estimate.