Our assumptions for average rate of real growth of investments are based on the long-term averages of our sophisticated simulation methodology (see “What assumption do you make about the market’s future behavior”). Many financial advisors and planners usually start with an assumption about the expected growth, often taken from a common Wall Street research report, then overlay some fluctuations around them to “randomize” the future. However, that kind of randomness is highly artificial and the entire multi-year simulation is based on the initial assumption which is often only valid for the short term. Our assumptions, on the other hand, are consistent with long-term patterns of market behavior and are more suitable for projections of investment returns for user’s lifetime horizon, many decades in the future.
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