No matter how sophisticated your understanding of economics, or the ins-and-outs of a particular investment market, predicting the financial future is still like playing the lottery. To emphasize this we have included a tool which simulates the random aspect of the behavior of financial and other markets.

When you click the Simulate Market Variability button the behavior of the Secondary Account changes. Its associated interest rate is no longer held constant over time. The first year of the period starts, as before with an interest rate set using the interest rate control, but for each succeeding year the rate varies by a small amount from that used in the previous year. The size and direction of the change is 'randomly' determined, with small changes being more likely than large ones. (Overall the changes follow a normal distribution). You will see that over long periods (try 100 years) the significance of the random, or impossible-to-predict quality of markets is quite striking.

Remember: This version of the future, as far as we know, is as valid a representation of what will happen as the default constant-rate scenario.

Here is an example of an investment of $100,000 - with an initial interest rate of 5%. The chart on the left shows its behavior if the rate remains at 5%, while the one on the right shows the effect of a small random increment and decrement made each year to the interest rate.

To generate another simulation, with new random parameters, click the New Simulation button: