Portfolio Growth Over Time
Deterministic model with fixed assumptions: stocks return 7% a year and bonds 3% a year (nominal, long-term averages); the "bad year" applies a −37% drop in stocks and −5% in bonds (roughly the order of magnitude of 2008 and 2022). It doesn't use live historical data or predict the future — it illustrates the trade-off between expected return and how deep the hole gets: more stocks means a higher expected final value, but a rougher bad year. The risk that actually matters isn't the one a chart measures, but the one that would make you abandon your plan.
What Each Field Means
A quick look at each input and each result.
The starting capital and what you add each month — the same for both portfolios, so the only difference between A and B is the allocation.
The percentage in stocks for each portfolio; the rest goes to bonds. It's the one decision that actually matters: you can't edit the expected return of each asset, only how much you put into each one.
Adds two down years at the start of the horizon. With the same final allocation, a bad start changes the outcome a lot — that's sequence-of-returns risk.
The outcome of allocation A at the end of the chosen horizon.
The outcome of allocation B, with the same capital and horizon.
This isn't a maximum drawdown calculated from the simulation — it's a representative bad year (on the order of 2008 or 2022) applied to each allocation, to compare how much weight stocks add to the scare.
Frequently Asked Questions About This Calculator
Why can't I change the expected return on stocks and bonds?
That's deliberate: if you could pick optimistic returns, any allocation would look good. By fixing them (7% and 3% long-term averages), the simulator isolates the one variable that actually decides the outcome — the split between the two.
What is "sequence risk" and why does it matter so much early on?
A downturn early in the horizon does more damage than the same downturn late in it, because there are fewer years left to recover and future contributions carry less weight in the total. This is sequence-of-returns risk: same average return, different order, different outcome.
What exactly does "return in a bad year" mean?
It's a representative crisis year (on the order of −37% in stocks and −5% in bonds, like 2008 or 2022) — not the worst possible drawdown or a calculation from the simulated years. It's there to compare, allocation against allocation, how a real scare actually feels.
Does this include taxes?
No. This calculator compares allocations while the money stays invested. Taxes apply when you withdraw — that's a separate topic this tool doesn't cover.