Portfolio Accumulation Simulator

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The Purpose (Why?)

To understand the range of possible future portfolio outcomes ("cone of uncertainty") during your wealth accumulation phase due to market volatility and the specific order of investment returns. (Note: Simulations use inflation-adjusted "Real Dollars")

How it Works

Enter your Initial Balance, Annual Savings, Savings Growth Rate, expected Return/Volatility parameters, and simulation duration. The calculator simulates 500 potential market trajectories to project your terminal wealth distribution.

Foundational Research

Read the core research articles to understand compounding and the accumulation phase of the FIRE journey:

ALGORITHMIC_NOTE: REAL_DOLLARS

Simulations use "Real Dollars" (inflation-adjusted). This means a 0% return maintains purchasing power, while positive returns approximate growth above inflation.

Input Specifications

PARAMETER DETAILS
Current Portfolio Value ($)
Starting portfolio value.
EXAMPLE: $0
Annual Savings ($)
Base annual contribution amount.
EXAMPLE: $12,000
Savings Growth (%)
Annual percentage increase in savings contributions.
EXAMPLE: 3.0%
Real Return (%)
Average annual return (inflation-adjusted).
EXAMPLE: 7.0%
Standard Deviation (%)
Annual standard deviation (volatility).
EXAMPLE: 17.0%
Management Fee (%)
Annual percentage fee or expense ratio deducted from the portfolio.
EXAMPLE: 0.0%
Duration (Years)
Length of the simulation in years.
EXAMPLE: 30 Years
Benchmark Values
  • 50/50 Portfolio (Stocks/Bonds)
    R: 5.8% | σ: 6.1%
  • 100% Stocks (S&P 500)
    R: 7.0% | σ: 17.0%
Example Visualizations
Example Visualization
Interactive Calculator

Ready to analyze your own portfolio numbers?

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Example Output

View an interactive sample report generated by this simulation engine.

View Sample Simulation Result

Frequently Asked Questions

The simulator runs 500 Monte Carlo paths using your expected Real Return and Standard Deviation. For each path, it models your annual contributions and applies randomized returns to chart the range of possible accumulated wealth over time.

The simulation engine models annual returns drawn from a normal distribution with your entered Arithmetic Mean (μ) and Standard Deviation (σ). Because investment returns compound multiplicatively, volatility drag systematically reduces the realized compound growth rate (geometric mean, or CAGR). The expected median trajectory follows the mathematical relationship g ≈ μ - σ2/2. For example, an input of 7.0% return and 17.0% volatility creates a ~1.45% annual drag, yielding a median compound growth rate of ~5.55%.

You can perform a zero-variance sanity check: set Standard Deviation to 0.0% (and Management Fee to 0.0%). In this deterministic mode, all random volatility is eliminated, and the projected balance at year t will match standard spreadsheet compound interest (P0 × (1 + r)t) down to the exact dollar. Once verified, restoring realistic volatility (e.g. 17% for stocks) reveals the true geometric cone of uncertainty.

By factoring in annual growth of your contributions (e.g. 3.0%), you simulate realistic increases in your saving capacity as your income grows over time, which dramatically accelerates compound growth.