For More Information
If you're interested in theory, you can see the separate MPT article that explains how diversification improves your return/volatility tradeoff;
the links page in that article lists books and sites that would be appropriate.
Here are two articles outlining why Monte Carlo is the way to go for retirement planning:
William F. Sharpe's Financial Planning in Fantasyland,
and William J. Bernstein's The Retirement Calculator from Hell.
Other Monte Carlo calculators are available, and tend to fall into three categories: (1) standalone calculators (like ours) that require you to input expected returns and standard deviations;
(2) sales oriented calculators, that let you create a portfolio from a particular provider's mutual funds; and
(3) fees-based calculators, that can help you create a portfolio from many different sources.
Here are some representatives:
MCRetire from Efficient Solutions
(standalone - this is a product that you purchase and download)
T. Rowe Price's Retirement Income Calculator
(sales oriented)
Financial Engines
(fees-based, elaborate)
Quantext
(fees-based, uses historical data)
Money Tree's Retirement Capital / Monte Carlo calculator
(fees-based: this is a demo for a product meant to be used by financial planners to help their clients)
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