"Growth is fixed" is a special setting found under Advanced Settings > Growth on the Savings, Investments, and the Pensions > Money Purchase and Drawdown Pension screens.
Use in modelling accounts with fixed / assured returns
When this option is ticked, it can be used to model an account that has a fixed, guaranteed return. This relates specifically to performance simulations, as growth is assumed fixed on all accounts unless you do something to adjust it. If you are running a major loss simulation or using the software's performance slider to move growth rates up or down, an account with the fixed growth option ticked would be effectively excluded from the simulation. It has a fixed return.
The default fixed growth setting and how it relates to simulations
This setting is left unticked, by default, for investments, money purchases and drawdown pensions, which could have variable rates of return when running simulations that adjust return.
The growth on cash accounts (savings), on the other hand, is normally assumed fixed, which is to say that these accounts are set to be excluded from any simulations that make adjustments to returns. These simulations include:
- Investment return rate need analyser,
- Performance slider,
- Monte Carlo and Historic simulations,
- Major Loss / Loss Capacity.
We exclude cash accounts from these simulations because they would usually skew results. For example, to assume that a savings account could have returns of 6% or conversely that it could drop 10% in value in a down market would probably be unrealistic. Cash based investments are assumed to be relatively stable, with little potential for gain or loss.
Assumptions for cash accounts grown using market assumptions (100% cash allocation)
If the "Use 100% Cash Allocation" option is ticked, the account is being grown using the market assumptions for cash, which provide a potential upside and downside range that fixed growth rates do not. Cash accounts grown using a 100% cash allocation are included in simulations that make adjustments to returns.