Future projection is a Robinhood Strategies feature that’s accessible from within your managed account. You can get to it by selecting Future as a time interval for your Overall portfolio return chart. It projects the future value of the account within a specified range of time. The range includes the impact that market conditions could have on your managed account and the likelihood of various investment outcomes.

To calculate future projections, the team uses Monte Carlo simulations based on your investment portfolio allocations. How it works has more details.

While the results don’t include inflation or tax assumptions, they do include estimated future market returns, asset growth, and management fees. For more details about our fees, check out Robinhood Strategies FAQ.

Keep in mind that the dashboard illustrations are current as of the date provided, based in part on third-party data sources. Any results provided are based on periodic pricing data from third parties. Results are also based on the value of your account. Because these values change over time, your results may change each time you use the dashboard. If you model changes to your investor profile, using the investor profile update tool in your dashboard, and decide to save your changes, the results of this analysis will likely also change. It’s important to remember that the asset amounts the dashboard calculates are approximate, as is some of the information entered into the dashboard.

Market values, account balances, and account asset class allocations that you hold in your managed account will be updated automatically each time the dashboard runs.

The future projection dashboard uses Monte Carlo simulations to project a range of hypothetical market return scenarios. Simulations are based on a historical performance analysis of asset class returns, including a range of potential returns for each asset class, volatility, and correlation, reviewed every quarter. Asset classes are represented by monthly index return data from Bloomberg LLC, not actual investments.

• Global equities are represented by the Bloomberg World Large and Mid Cap Index from 1999 onwards.
• US Bonds are represented by the Bloomberg US Aggregate Bond Index from 1999 onwards.

The dashboard graphs a range of results based on how an asset mix may have performed, given the built-in assumptions and your inputs in the dashboard, in a certain percentage of the simulated market scenarios. It uses the same simulated market scenarios each visit, unless otherwise updated.

These percentages are called confidence levels. For example, the confidence levels highlighted in the following table are 95%, 50%, and 5%, where 5% is considered very conservative market performance. This means that in 95% of the historical market scenarios run, a particular asset mix performed at least as well as the results shown. Conversely, in only 5% of the historical market scenarios run, a particular asset mix failed to reach the results shown. The dashboard uses the 95% to err on the side of a more conservative estimation of future market performance. However, the median 50% level is highlighted with a green line, which is the most likely outcome.

Results are available for viewing at the 5%, 50%, and 95% confidence levels as described in the following table:

Within the dashboard, the simulations are based on your current account asset mix. The dashboard categorizes the portfolio based on the total value and type of assets held. The assets are classified by asset class (i.e., global equities and bonds).

The future projection highlights the time horizon from your investor profile data, which is provided by you. You can verify and change the data for continued accuracy, which also depends on the type of RAM account:

• For a taxable managed account, after you select a time horizon range, the longest end of the range will be highlighted on the chart.
• For a retirement managed account, the dashboard will calculate your time horizon based on when you plan to retire. Or if you’re already retired, based on when you expect to start making withdrawals from the account.

While the dashboard enables you to enter your own deposit or contribution amounts to include in the projections, it doesn’t stop you from entering annual contributions to a retirement account above the yearly IRS limit. The outcome of the dashboard may be less meaningful if you enter unrealistic contribution amounts.

The actual rate of return is largely dependent on the investments and allocation in your account. Annual returns assume the reinvestment of interest income and dividends, no transaction costs, and the rebalancing of the portfolio each month. The returns for actual investments could be reduced by expense ratios not reflected in these hypothetical illustrations.

The dataset uses the monthly returns from January 1999 to September 2024:

• The Bloomberg World Large and Mid Cap Total Return Index represents global equities that had an annualized return of 7.6% (including dividends) since 2004, achieving a highest year return of 35% in 2009 and a lowest year return of -43% in 2008.
• The Bloomberg US Aggregate Bond Index represents US bonds that had an annualized return of 4% (including dividends), achieving a highest year return of +5.5% in 2019 and a lowest year return of -15.1% in 2022.

Keep in mind, the scenarios presented are hypothetical, future rates of return can't be predicted with certainty, and investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It’s not possible to invest directly in an index and the compounded rate of returns referenced in this article don’t reflect sales charges and other fees that investment funds or investment companies may charge.

Although past performance doesn’t guarantee future results, it may be useful in comparing investment strategies over the long term. Average annual returns are hypothetical, and if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Average annual total returns simply smooth out variation in performance, which are not the same as actual year-by-year results.

For the interaction between the asset classes, the team uses a variance or covariance matrix. This is related to correlations, which is a measurement of how the returns of these investments move together. Correlations can range between -1 and +1. The historical correlation between global equities and US bonds for the referenced indexes is: 0.16 for the period of January 1999 to September 2024. This means that historically they behave differently, offering some return diversification benefit.

Note that different asset classes tend to offer different balances of risk and reward. Diversification relies heavily on the concept of correlation:

• If 2 investments are highly correlated and one moves higher, generally, the second investment will move higher as well.
• Conversely, if there is a low correlation between the investments, they would be expected to move in the opposite direction.

When you put assets that have low correlations together in a portfolio, you may be able to get more return while taking on the same level of risk, or the same returns with less risk. The less correlated the assets are in your portfolio, the more efficient the trade-off between risk and return. With a portfolio of assets with low correlation, even if a portion of the portfolio declines, the rest of the portfolio is designed to grow. Thus, you can potentially offset the impact of poor market performance on the overall portfolio.

Generally, the greater the potential for long-term returns, the greater the risk of volatility, especially over the short term. A more aggressive portfolio (one with a higher stock allocation) could represent higher risk, especially in the short term, but higher potential long-term returns. Conversely, a less aggressive portfolio (with a lower allocation to stock and higher allocation to bonds or short-term investments) could represent less short-term risk, but potentially lower long-term returns. History has shown that diversifying assets among different asset classes, industries, and countries can generally improve the long-term performance of a portfolio.

However, it’s important to remember that certain asset types involve greater risk than others do. For example, foreign investments can involve greater risk than US investments. Diversifying your investments across asset classes, industry sectors, and nations may help minimize your overall exposure to sudden market swings that may cause sudden changes in the price of investments. However, it doesn’t ensure a profit or guarantee against loss.

All investments involve risk and loss of principal is possible. Future projections are provided for informational purposes only and pertain only to the account in which it is shown. They aren’t a recommendation to buy, sell, or hold any securities, or engage in any investment strategy outside your managed account. Any forward-looking statements on future expectations, results, or events are based on Robinhood Strategies’ current views and assumptions. Actual results or events may differ materially.

For additional information, including about fees and expenses, risks, and conflicts of interest, review the Robinhood Strategies Form ADV Part 2A and Form CRS.

Robinhood Asset Management, LLC (“Robinhood Strategies”) is an SEC-registered investment advisor. Robinhood Financial LLC (member SIPC) is a registered broker dealer. Robinhood Securities LLC (member SIPC) provides clearing services.