Our simulation tool draws on historical return and risk data compiled by Professor Aswath Damodaran of NYU Stern (source). It incorporates seven major asset classes, each with distinct risk and return characteristics. By modeling their historical behavior, the tool helps you explore how different portfolio combinations might perform over time.
Equity Investments
- S&P 500: Large-cap U.S. stocks representing the 500 largest publicly traded companies in the United States.
- Small Cap: Smaller U.S. companies that historically offer higher growth potential, but with greater volatility than large caps.
- Real Estate: Real estate investment trusts (REITs) and other property-related investments, providing diversification and a potential hedge against inflation.
Fixed Income
- 10-Year Treasury Bonds: Long-term U.S. government bonds offering stability, predictable income, and lower risk than equities.
- 3-Month Treasury Bills: Short-term government securities that provide liquidity and near risk-free returns.
- Baa Corporate Bonds: Investment-grade corporate debt with higher yields than Treasuries, but with added credit risk.
Alternative Investments
- Gold: A historically valuable precious metal, often used as an inflation hedge and a diversification tool during market uncertainty.
By understanding how these asset classes have behaved both individually and together, you can use our simulation tool to build more informed, diversified, and resilient retirement portfolios.