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Using Portfolio Visualizer to Estimate Projected Rate of Return
Using Portfolio Visualizer to Estimate Projected Rate of Return
Nancy Gates avatar
Written by Nancy Gates
Updated this week

This article describes one method you may wish to explore for setting your Rates of Return in PlannerPlus.

The first step to selecting a Rate of Return for each of your accounts is always to determine your asset allocation. Your asset allocation is the balance of equities, bonds, and cash in each account and if you don't know what you have in each account this information may typically be found on your statements or in your institution's portal.

Once you have the asset allocation for an account, you may want to use the Portfolio Visualizer Backtest Portfolio feature to view the historical return. You'll enter the percentage of assets you hold in each asset class and be able to view historical data for your particular asset allocation.

Optimistic Rate of Return

You may want to use the CAGR (Compound average growth rate), conservatively reduced by 1%, as the Optimistic Rate of Return in PlannerPlus.

Pessimistic Rate of Return

Next, you may want to navigate to the Monte Carlo Simulation in Portfolio Visualizer to view projected returns and determine your Pessimistic Rate of Return. In this feature, enter the same portfolio as you did for the Backtesting feature and use the Projected Return for the 10th Percentile (this is often the worst case scenario), conservatively increased by 1%, as your Pessimistic Rate of Return.

Entering the Rate of Return in NewRetirement.

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