Financial Planners Rethink Monte Carlo Simulation Tools

Most mutual fund companies and financial planners rely on Monte Carlo simulation tools to help investors plan for their futures. The tools run portfolios through hundreds, even thousands, of investment scenarios to predict the success rate of various returns given contribution rates, investment mix and risk tolerances. But virtually none were ever designed to take a year like 2008 or the current extremes in the market into account-which has prompted many statisticians to go back to the drawing board, The Wall Street Journal reports.

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