They seem similar to me
Hey Rick:
Deterministic forecasting is used to determine if a private client is going to meet their retirement goals by using simple variable inputs to create a linear model that helps determine success. There is a multitude of different variables (portfolio value, investment horizon, age, return assumptions, cash flows, taxes, inflation, etc…) that can be thrown in to make the analysis more specific. Deterministic forecasting is interchangeable with Monte Carlo simulation (which is better but more complex). Think of the difference as deterministic forecasting can be done in excel, while Monte Carlo requires specialized software to run many simulations (as I’m sure you know)
Mortality tables have a different function - their sole function in the CFA curriculum is to determine the probability that an individual lives to a specific age. Think of a mortality table as a tool used to determine one input into the deterministic forecasting model or Monte Carlo simulation. The data for a mortality table would come from an actuarial team or database to determine how likely a person is to live to any age. These probabilities will be used to help create a ‘present value’ of sorts for the portfolio.
Hopefully, this helps!
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