Published by ETF Compass · a Lambda Software product
Published and updated 18 August 2026
Labels make assumptions easier to compare
A cautious scenario might combine a lower growth assumption, higher inflation, higher costs, or a shorter contribution period. A base scenario can state the inputs you currently use for planning. An optimistic scenario can test what changes if several favourable assumptions occur. The labels describe the inputs; they do not say how likely any outcome is.
Keep each scenario understandable. Changing every input at once may create a useful boundary, but changing one important input at a time shows which assumption drives the difference.
Sensitivity is more useful than a precise-looking endpoint
Long-run investment returns arrive in an uneven order. A projection that uses one steady annual rate cannot show every possible path to the same average. It is therefore useful to test lower return, higher inflation, a contribution pause, or a longer horizon separately. The range tells you how dependent the result is on an assumption, not what will happen.
Sequence risk matters especially when money will soon be withdrawn: losses early in a withdrawal period can have a different effect from losses late in an accumulation period. ETF Compass does not simulate changing return sequences or a full withdrawal plan.
Worked example: compare a cautious and a base case
Same savings, different stated assumptions
For a €5,000 initial amount and €300 monthly deposit over 20 years, first run 4% growth, 3% inflation, and 0.40% TER. Then run 6% growth, 2% inflation, and 0.20% TER. The calculator holds the contribution and horizon visible while showing how return, purchasing power, and annual costs alter the modelled result. Neither result is a forecast or a target.
Open the cautious illustrationThe stress setting is a simple adjustment, not a market simulation
ETF Compass applies its EUR/USD stress percentage to the calculated terminal value after the projection. It is a transparent sensitivity input for a stated currency assumption. It does not model exchange-rate paths, hedging, trading spreads, taxes, fund currency, or the relationship between a listing currency and the assets held by an ETF.
Use it to ask “what if this stated adjustment applied?” rather than as evidence that currency risk has been measured completely.
Read what is included before relying on a scenario
The model includes the values you enter for starting investment, deposits, growth, selected fees, inflation, taxes, and stress. It excludes actual market paths, inflation surprises, personal cash-flow changes, liquidity needs, product selection, and many tax or broker details. It cannot assess goals, risk tolerance, or capacity for loss.
Sources
- Investor.gov: What is risk? (accessed 18 August 2026)
- Investor.gov: Fees and expenses (accessed 18 August 2026)
- ESMA Investor Corner (accessed 18 August 2026)
Education, not personal advice
This article is general education, not a recommendation to buy, sell, hold, or allocate to an investment. Consider regulated professional advice where appropriate to your circumstances.