Imagine youāre planning a road trip and you want to map out your route to your destination. You could just take the shortest route on the map, but the reality is that it would be more accurate to consider different factors, such as traffic, road construction or potential points of interest. As you run through different scenarios in your head youāll consider how each one affects your travel time.
A Monte Carlo simulation is like that, but for financial planning. Your chance of success score is calculated using Monte Carlo simulation, running 1,000 hypothetical market return scenarios to help determine a realistic range for your projected savings outcomes.