When I run a Monte Carlo simulation, the first year always looks like the attached image. The year before the start year is a fixed point, but the "fixed return" results climb as expected where the Monte Carlo results always step down a chunk before proceeding as per normal. It's like the code assumes a really bad first year of returns and then proceeds. Any idea what's going on?
@asahopkins No, that's puzzling to me, too. If you'd send a representative export file to me (mail@pralana consulting.com) I'd be happy to investigate and let you know what's going on there.
Thanks,
Stuart
I think I see what’s going on and it relates to a modification I made a few years ago to address cases where users had balances in their 529 plans (and HSA plans) that were never consumed because of their settings on the Children’s expenses page which, in turn, prevented the consumption smoothing algorithm with the Monte Carlo method from converging on a solution. My fix to address that was to exclude 529 plan balances from consideration when doing Monte Carlo analyses. In most cases this is never apparent to users but in your case, with a large 529 plan balance, it is very apparent. I THINK I have subsequently resolved that issue in some other way but then failed to remove the exclusion of 529 balances from MC analyses. This is complex stuff, so I don’t plan to make any quick fixes at this point. Given that it is now November, I think I will make this fix as part of the 2025 model of Pralana Gold and test it thoroughly before releasing it, and not perturb PRC2024 so late in the year.
Stuart
