Why the following statement is incorrect?
Asset-only approaches can benefit from the use Monte Carlo simulation to assess the likelihood of shortfall risk for retired clients (the risk that they will outlive their assets).
If I was to take a stab I’d say that AO ignores liabilities (future spending) and focuses only on asset return / risk tradeoff.
But monte carlo can be used to determine ruin probabilities. Presumably under an asset-liability management approach.
Voyager hit the nail on the head!
Tried to get a Homer woohoo gif in there but clearly I’m computer illiterate.
There we go!