Question 1

What is a Monte Carlo simulation for financial independence?

Accepted Answer

A Monte Carlo simulation runs thousands of scenarios with randomized market returns to create a probability distribution of when you might reach FI, accounting for market volatility.

Question 2

What do the percentiles mean?

Accepted Answer

The 10th percentile shows your outcome in poor markets (only 10% do worse), median is the typical outcome, and 90th percentile is the outcome in strong markets.

Question 3

How accurate is the simulation?

Accepted Answer

The simulation provides a range of probable outcomes based on historical market behavior. Actual results depend on future market conditions, which are inherently unpredictable.

Question 4

What expected return should I use?

Accepted Answer

Historical stock market returns average 7-10% before inflation. A conservative estimate of 6-7% real returns is commonly used for long-term planning.

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