Someone has approached you at the age of 65 to plan for retirement. The person is currently having a wealth of Rs. 10,00,000 and wishes to drawdown Rs. 1,50,000 end of every year from the corpus. As a financial advisor you are supposed to recommend a portfolio which can be a mix of two instruments 1) risk free bond which is expected to give 6% return PA 2) a risky security whos returns follow a normal distribution with mean 12% and stdev 30%

If the person is expected to survive till the age of 75 i.e. for next 10 years, and you have recommended a mix of 30% in risk free and remaining in risky security, what is the chance that the wealth can get eroded by the time the person reaches the age of 75. (Note: The person invests the wealth in the proportion of 30% in risk free and remaining in risky at the beginning of every year. At the end of every year the person draws down Rs. 1,50,000 and with the balance wealth reinvest again in the proportion of 30-70%.) (Use Excel financial Modelling Simulation)