Why You Should Avoid Simplistic Monte Carlo Results and Create a Real Financial Plan Instead
- Why You Should Avoid Simplistic Monte Carlo Results and Create a Real Financial Plan Instead James Conole, CFP® 19:54
Are you mistaking a Monte Carlo analysis for real financial planning? I'll explain why this common tool, often used by financial advisors, is not a substitute for a true financial plan. A Monte Carlo analysis provides probabilities of success based on investment outcomes, but it doesn’t offer actionable steps, strategies, or a clear path to achieving your goals.
I’ll break down the benefits and limitations of Monte Carlo simulations and show you what real financial planning should deliver: Clarity on spending, income strategies, tax-saving opportunities, investment optimization, and a roadmap to living your best life. Don’t settle for vague probabilities—learn how a comprehensive financial plan can give you the confidence and direction you deserve.
Questions answered:
1. Why is a Monte Carlo analysis not the same as a comprehensive financial plan?
2. What should a true financial plan include to ensure success and peace of mind?
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Timestamps:
0:00 – Monte Carlo analysis vs financial plan
1:34 – What is Monte Carlo analysis?
4:02 – Why a MC analysis is not enough
6:08 – Benefits of a MC analysis
7:59 – Downsides of MC analysis
11:18 – Consider of severity of failureÂ
13:23 – Perspective and peace of mind
14:51 – What a financial plan do
17:08 – Summary
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