Monte Carlo Portfolio Projection

Portfolio Calculate · Updated 9 July 2026

What a Monte Carlo projection actually does

Most simple projections grow your money at one fixed rate — say 7% a year — and draw a single smooth line. Real markets don't move in a straight line, so that line hides the risk. A Monte Carlo simulation fixes this by running the future many times over. Each run (a "path") applies a different sequence of random monthly returns, drawn from the average return and volatility you expect. After thousands of runs you have thousands of possible ending values, and their spread tells you what's likely, what's optimistic, and what's a genuinely bad outcome.

The result is shown as probability bands: a median line in the middle, and shaded ranges around it. That's far more honest than a single projection, because it shows the uncertainty instead of pretending it away.

Step by step

1. Start from your real holdings. Add each stock or ETF by share count so the projection begins from your actual portfolio value, not a round number.
2. Pick a time horizon. Choose how far ahead to look — 10, 20 or 30 years. Longer horizons compound more, but also widen the range of outcomes.
3. Set expected return and volatility. A good starting point is your portfolio's own history: its past annual return and how much it bounced around. Then sanity-check it — markets rarely repeat the past exactly, so it's worth also testing a lower, more conservative return.
4. Add a monthly contribution. If you invest a fixed amount each month, include it. Regular contributions often matter more than the exact return assumption over long horizons.
5. Run the simulation. Generate many paths — 1,000 is plenty for a smooth, stable range.
6. Read the bands and the odds. Look at the median (the middle outcome), the 10th–90th percentile range (the likely spread), and, if you set a goal, the percentage of paths that reach it. Then do the same for projected annual dividend income.

The easy way: use Portfolio Calculate

Portfolio Calculate's Projection tab does all of this for free. It starts from your holdings, defaults the expected return and volatility to your portfolio's own history (both adjustable), lets you set the horizon and a monthly contribution, and runs 1,000 simulated paths. You get a fan chart with a Value / Income toggle, headline numbers (median ending value with its 10th–90th range, median annual income, total invested), and the probability of reaching a goal you enter. Nothing installs and your portfolio stays in your browser. Pair it with the backtest to compare the past with the projected future.

How the simulation works (the method)

For each path, the tool steps month by month. Each month it multiplies the portfolio value by a random growth factor built from your annual return and volatility (returns are modelled so the value can't go negative), then adds any monthly contribution. Repeating that for the whole horizon gives one possible future; doing it 1,000 times gives a distribution. The bands are simply the percentiles of all those paths at each year — the 50th for the median, the 10th and 90th for the outer edges. Projected dividend income assumes your current weighted yield holds as the portfolio grows, so it tracks value with the same probability spread.

How to read it wisely

Treat the median as a reasonable middle case, not a target — half of outcomes land below it. Pay attention to the bottom of the range: the 10th percentile is your "rough decade" scenario, and history shows markets can do worse still. If your plan only works in the top half of outcomes, it's fragile. Lowering the return assumption, extending the horizon, or raising contributions are the levers that make a plan more robust.

Frequently asked questions

What is a Monte Carlo portfolio simulation?

It projects your portfolio forward using many random return paths instead of a single average, then shows the spread of outcomes as probability bands rather than one number.

How do I project my portfolio's future value for free?

Use Portfolio Calculate: add your holdings, open the Projection tab, set horizon, return, volatility and any monthly contribution, and it runs 1,000 paths — no signup.

What do the bands mean?

The line is the median. The inner band is the 25th–75th percentile and the outer band the 10th–90th, so about 80% of simulated outcomes fall inside the outer band.

Where do the assumptions come from?

By default from your portfolio's own historical return and volatility, and you can adjust them. It's wise to also test a more conservative return.

Is it a prediction?

No — it's a hypothetical range for planning and stress-testing, not a forecast or a guarantee, and not financial advice.