Stock Portfolio Sample

About this model

This diagram models an investment growth scenario over time, incorporating key financial planning elements like annual contributions, mean returns, and variable market performance. At its core, the diagram utilizes mathematical models to simulate the annual return of an investment, based on the standard deviation and mean return parameters, and calculates the year-end investment value considering annual contributions. The system employs a normal distribution formula to generate a random yearly return, reflecting the real-world variability in investment returns.

The interaction between nodes is primarily focused on calculating the return on investment (ROI) by adjusting for the mean return and standard deviation, alongside accounting for annual contributions. The diagram makes use of registers to hold formulas that perform calculations related to investment growth, including simulating market conditions by generating a normal distributed random return. Additionally, it integrates a mechanism to update the previous year's end value of the investment, cycling this value back into the calculation for the next period’s end value, thus illustrating the compounding effect over multiple time steps. The diagram represents a sophisticated financial model that can be used to visualize and predict the growth of an investment portfolio over time.

"Stock Portfolio Sample" is a public Machinations diagram shared in the Community by Catalin Ichim, with 21 components.

It was created in March 2024 and last edited in November 2024.

Open the diagram in the Machinations app and press Play to watch the resources move, adjust its values to test how the system responds, or remix it to make an editable copy in My diagrams.