eBook: Stochastic vs Deterministic Forecasting

Modular technology for tomorrow's market

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Helping customers manage their money effectively means fully understanding the impact that different investment returns, time periods and economic factors have on their portfolio.

But how do you account for the inherent randomness of these factors and the markets? With a deterministic model, you lack time horizons and sequencing risk – which can seriously undermine your customers' financial outcomes.

Read our eBook to see how a stochastic model can benefit both you and your customers, and learn about the risk of using deterministic models.

With stochastic modelling, you can:

  • Help your customers understand the effect of sequencing risk on the long-term value of their portfolio and the sustainable income withdrawals that can be made

  • Give realistic, robust predictions, as you won’t be upset by the unexpected implications of sequencing risk

  • Consider investment time horizons, and properly reflect the term dependency of risk and return associated with different asset classes
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