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Portfolio Drawdown Simulator

Market crashes are inevitable features of the financial system, not bugs. The Drawdown Simulator helps you replace panic with mathematics by visualizing the exact path to recovery for your portfolio.

Key Concepts

Mathematical Asymmetry

Gains and losses are not equal. A 20% loss requires a 25% gain to recover. A 50% loss requires a 100% gain. This tool models this reality.

The Recovery Lever

Your monthly contributions are your biggest advantage during a crash. "Buying the dip" significantly accelerates your timeline to break-even.

Simulating a Scenario

  1. Current Portfolio Value: Enter your total liquid net worth for a realistic "fear test."
  2. Monthly Contribution: The amount you will continue to invest during the recovery.
  3. Annual Return: Your expected average growth rate during recovery (Be conservative).
  4. Drawdown Scenario: Choose between a Correction (-10%), Bear Market (-20%), or Crash (-40%).

Interpreting the Chart

The generated chart shows three phases:

  • The Crash: The immediate drop in nominal value.
  • The Grind: The period where your returns and contributions work to recover the loss.
  • The Recovery: The point where you return to your original peak value.

Real-World Fact

Historically, the S&P 500 has experienced a -10% correction almost every year. Panic selling during these periods is the #1 reason retail investors underperform the market. Use this simulator to remind yourself of the math before making an emotional exit.