Stock Portfolio Sample

About this model

This diagram models a simplified investment portfolio simulator focusing on annual contributions, simulated returns based on a normal distribution, and the resulting year-end values over time. At the core, it simulates the process of making an annual fixed contribution to an investment account, calculates returns based on randomly generated values influenced by a specified mean return and standard deviation, and computes the year-end value considering both the new contribution and the return on the previous year's end value.

The simulation operates through a series of connected registers and pools that use statistical formulas to mimic the variability and performance of investments. The 'Normal inverse' register generates a random number from a normal distribution, which is then used to calculate the 'Return' for a year by adjusting it with predefined 'Mean return' and 'Standard Deviation' values. This simulated annual return is applied to the sum of the 'Annual Contribution' and the 'Previous Year End Value', to determine the 'Year End Value'. This process represents a cycle of investment growth over time, emphasizing the impact of compound interest and market variability. It’s a useful tool for understanding how different factors can affect the growth of investment over multiple periods.

“Stock Portfolio Sample” is a public Machinations diagram by Nicolás Munafó, shared in the Machinations Community.

You can open the original diagram in the Machinations app, press Play to watch how resources move through it, and change its values to see how the system responds. Machinations is a visual tool for designing, simulating and balancing game economies and other systems, where resources flow through sources, pools, drains, converters and gates. In a diagram, a source creates resources, a pool stores them, a drain removes them, a converter changes one resource into another and a gate decides where they go next.