The use of over-simplistic deterministic projections renders most cashflow models fundamentally flawed and dangerous, Bruce Moss warns
Cashflow modelling tools that use deterministic or over-simplistic stochastic projections are fundamentally flawed because they are unable to consider ongoing variables that will affect the plan over time. Now more than ever, with increased market volatility and other economic uncertainties, the limitations of deterministic and some stochastic models need to be fully understood to avoid potential catastrophic harm to retirees' future plans and lifestyle. Deterministic tools overestimate sustainable income because they are unable to take into account market volatility, which causes ‘po...
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