Method and system for computing path dependent probabilities of attaining financial goals
View Patent ↗A method and system for computing the probability of attaining one or multiple financial goals is disclosed. Each goal is analyzed and reduced to a series of cash flows. A threshold criterion of success is established. A plurality of paths are generated. Each path is checked on the basis of the success criterion established earlier and those that do not meet the success criterion are considered failures. The probability of success is a function of the paths that are not failures.
1. A computer system of determining the probability that a financial goal expressed as a cash outflow will be met, comprising:
(a) a database including:
(i) a set of assets associated with a user, said assets associated with a market value; and
(ii) a criterion for success associated with said user, said criterion for success associated with a plurality of periods; and
(b) a programmed processor configured to:
(i) simulate a plurality of market scenarios on said assets, each said scenario adjusting said market value of said assets for each said period;
(ii) apply said criteria for success to each said scenario; and
(iii) calculate the probability said user will satisfy said associated criteria for success.