Forecast Options: Explanation and Impact

ℹ️ These options allow users to customize how portfolio return forecasts are generated and interpreted.

Rebalance

When enabled, the portfolio is periodically rebalanced to maintain target asset allocations. This can reduce risk by preventing drift but may also incur transaction costs. Disabling rebalancing assumes a buy-and-hold strategy.

Inflation Adjusted

Adjusting for inflation shows returns in real terms, reflecting purchasing power changes over time. Disabling this option shows nominal returns, which do not account for inflation effects.

Return Window

This option selects the historical period length (10, 20, or 30 years) used to calculate returns. Shorter windows may capture recent market conditions better, while longer windows provide more historical context and smooth out volatility.

Crypto Pricing Method

Users can choose between using historical crypto prices or a power law projection model. Historical pricing uses actual past data, which may be limited, while the power law model projects returns based on statistical fitting, allowing for more forward-looking forecasts.

Summary

  • Rebalance: Controls portfolio risk and transaction assumptions.
  • Inflation Adjusted: Determines if returns reflect real purchasing power.
  • Return Window: Sets the historical data period for return calculations.
  • Crypto Pricing Method: Chooses between historical data or projected returns for crypto assets.