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Continuing from my Part 1 video: https://youtu.be/R1PFb5B4zZo
Link to my LinkedIn article: https://www.linkedin.com/pulse/monte-carlo-simulation-wealth-planning-excel-fabian
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?
More resources on financial modeling on www.fabianmoa.com.