The Real Estate Financial Planner™ software allows you to model your own investing strategy or see examples of previously created investing models.
Often, users will choose to model risk and the variability of returns by using Rules to add this variability and conduct multiple runs of the same Scenario.
When we do multiple runs—sometimes hundreds or even thousands of runs—this is referred to as Monte Carlo.
Monte Carlo simulations allow us to summarize the results of a large number of runs of the Scenario.
If we take the average of all the values generated by the Monte Carlo runs for a given month, we call that the Expected Value ( EV) of the Scenario for that month.
To be able to see the EV Chart for a Scenario, first you must have run Monte Carlo on your Scenario.
Then, from the Chart page, you need to click on EV to be able to see the Expected Value (or the average return for the Monte Carlo runs) for that Scenario.
So, EV charts are not really separate Charts at all. They are an additional option on Charts with Monte Carlo.
If you think about it, you can toggle on the median line on the Chart which shows you the line where half of the Monte Carlo run results are above and half are below. The EV line is the average of all the values for that month.
If you’d like more information about using EV with the Real Estate Financial Planner™ software, check out the additional resources below: