*Stress Testing the Curie Portfolio*

**Investors experienced a traumatic year in 2008 and it will likely happen again. Are you prepared to deal with the risk? In the next two blog entries I will walk readers through a portfolio stress test using the Curie Portfolio. To work through this analysis, I will use the Monte Carlo software, Quantext Portfolio Planner (QPP). Most of you are familiar with Geoff Considine's software program as we use it frequently here at ITA Wealth Management. In the first screen shot, I pulled the investments and various percentages from the Curie TLH spreadsheet. In this analysis, I am assuming an inflation rate of 3.5% and a projected return for the S&P 500 of 7.3% annually. Keep in mind that the current inflation rate is 1.14%.**

**Critical information in the table below is the projected annual return of 9.4% with a projected standard deviation of 17%. These are rounded percentages. This gives us a Return/Risk ratio of 0.55, or below our desired value of something greater than 0.60. With a lot of work, we can push that ratio above 0.70 in this market, but it is not easy to find the right combination of investments to reach that level.**

**Another critical piece of data is the Diversification Metric (DM). This portfolio generates a 43% DM value or above our 40% threshold. We are satisfied with the diversification, but the risk is a little high and we will see how that plays out in Part II of this stress analysis. **

**In the following shot, we see how this portfolio works out for a 50-year old planning on retiring at age 66. This investor already saved $500,000 and expects to withdraw $40,000 per year. Until retirement, the investor will continue to save $1,000 per month or $12,000 a year, adding $192,000 to the current account.**

**In the screen shot below, you will observe the various probabilities of running out of money from age 88 to well over 100.**

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