Three simulation tools
PortWorth offers three complementary ways to test your portfolio against uncertainty:
- Monte Carlo: probabilistic projection of future wealth across thousands of randomised return paths
- Historical Replay: apply actual past crisis returns to your current portfolio
- Stress Test: manual shock sliders showing impact on net wealth, LVR, and repayments in real time
All three tools use your actual portfolio — the real holdings, real values, and real debt from your PortWorth account. There is no need to re-enter numbers.
Monte Carlo simulation
The Monte Carlo tool runs thousands of independent simulations of your portfolio's future, each using a randomly sampled annual return drawn from a normal distribution around your inputs.
- Go to Analysis → Performance → Monte Carlo tab.
- Enter Expected Annual Return. Historical ASX 200 total return is ~9–10%. A globally diversified portfolio is similar. Many planners use 7–8% for conservative projections.
- Enter Annual Volatility. ASX 200 historical volatility is ~15%. If your portfolio includes bonds or cash, use a lower blended figure.
- Set the Time Horizon in years. Common choices: 10 years (medium-term), 20 years (pre-retirement), 30+ years (FIRE planning).
- Set the Number of Simulations. 1,000 gives a fast result; 10,000 gives a smoother distribution. Both are statistically robust.
- Click Run. The fan chart appears within seconds.
Reading the fan chart
The fan chart shows the distribution of outcomes at each point in time:
- Dark gold line — median outcome (50th percentile). Half of simulations ended above this, half below.
- Wide gold band — 25th to 75th percentile. The "likely" range.
- Light band — 5th to 95th percentile. The extreme range — 90% of simulations fell inside this.
What to look for The 5th percentile (bottom of the fan) is your worst-case scenario. If this number is still above zero at your target date — and above your FIRE number — you have a high probability of success.
Historical Replay
Historical Replay answers: "What would have happened to my specific portfolio during the GFC?" Not a generic index, but your actual holdings at their current values.
- Go to the Historical Replay tab.
- Select a scenario:
- GFC 2008 — Oct 2007 to Mar 2009. ASX 200 fell ~54% peak to trough.
- COVID Crash 2020 — Feb to Mar 2020. ASX 200 fell ~37% in 23 days, then recovered within months.
- Dot-Com Bust 2000–2002 — Mar 2000 to Oct 2002. Tech-heavy portfolios fell 70–80%.
- Rate Shock 2022 — Jan to Oct 2022. Rising rates hit bonds and growth stocks hard.
- 2009 Recovery — Mar 2009 to Dec 2010. A bull scenario — what recovery looks like.
- Read the results: max drawdown (worst point), trough value in AUD, and months to full recovery.
Why this matters Most investors significantly underestimate how painful a 40% drawdown feels in dollar terms. Seeing "$420,000 portfolio → $250,000 at trough" is viscerally different from reading "-40%". This helps you calibrate your real risk tolerance before a crisis happens.
Stress Test
The Stress Test applies simultaneous, user-defined shocks to all asset classes and shows the immediate impact on your net wealth, LVR, and mortgage repayments.
- Go to the Stress Test tab.
- Adjust the sliders:
- Equities — apply a % change to all stock holdings (e.g. −30%)
- Property — apply a % change to property valuations (e.g. −20%)
- Crypto — apply a % change to crypto holdings (e.g. −70%)
- Interest Rates — apply a rate change in basis points (e.g. +200bps = +2%) to see repayment impact
- AUD/USD — apply a % change to the exchange rate to see impact on US holdings in AUD
- Read the live results: net wealth before and after, LVR for each property, and new monthly repayments at the stressed interest rate.
- Use presets for one-click scenarios: Bear Market (−30% equities), GFC (−55% equities, −20% property), COVID (−37% equities), Bull Run (+40% equities), Property Boom (+25% property).
The mortgage repayment check The most important stress test for leveraged property owners: set interest rates +2–3% and check whether the new monthly repayment is still affordable from your income. This is the "buffer" test your bank does when you apply for a loan.
Saving and exporting simulation results
- Click Save Scenario to bookmark your current inputs. Saved scenarios appear in the Scenarios panel so you can compare different assumption sets side by side.
- Click Export PDF to download the fan chart and percentile table as a formatted report. This is useful for financial planning conversations with an adviser.
- The Stress Test results can also be exported via Export PDF. The report includes your portfolio value under each scenario, which is useful for risk discussions.
Frequently asked questions
What return and volatility should I use for Monte Carlo?
For a diversified Australian equity portfolio: 8–9% expected return, 15% volatility. For a conservative balanced portfolio (60% equities, 40% bonds/cash): 6–7% return, 10% volatility. For a growth portfolio with crypto: higher volatility (20–25%). PortWorth's X-Ray tab shows your current allocation to help calibrate these inputs.
Can I add regular contributions to the Monte Carlo?
Yes. Enter your monthly savings amount in the Monte Carlo inputs. Each simulated path adds this contribution monthly before applying the random return, giving a realistic projection for accumulation-phase investors.
Do simulations use my actual portfolio composition?
Yes. All simulations start from your actual current net wealth figure. The Monte Carlo applies a single blended return to the total — it does not model individual positions. The Stress Test does model individual asset classes (equities, property, crypto) separately based on your actual holdings in each.