4.6 Monte Carlo Simulations
Monte Carlo simulations model thousands of possible futures instead of just one average. This article explains how the simulation works and when to use it. A detailed example compares a conservative portfolio (50/50 VT and GOVT) to SPY over 10 years with $80,000 annual withdrawals. The article walks through base case, worst case, and best case scenarios to demonstrate how volatility and allocation affect financial planning.