Managing individual investor portfolios..
Five things to consider for IPS:
1. Liquidity needs
2. Time horizon for investing
3. Taxes
4. Legal and regulatory constraints
5. Unique circumstances
---
Monte Carlo simulation: personal planning (retirement planning)
probabilistic distribution to be used: all different paths for the individual's earnings.
Normally median of distribution may be much lower than the average; fat tail... So providing client a prob distribution is quite useful.
Monte Carlo pitfalls:
a) Relying on historical data for prediction
b) Performance of specific investment relevant to user must be considered instead of general..
c) Tax consequences must be taken into account.
Normally median of distribution may be much lower than the average; fat tail... So providing client a prob distribution is quite useful.
Monte Carlo pitfalls:
a) Relying on historical data for prediction
b) Performance of specific investment relevant to user must be considered instead of general..
c) Tax consequences must be taken into account.
No comments:
Post a Comment