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Re: 401K calculator in today's dollars

Retirement calculators like http://www.cfiresim.com and http://www.firecalc.com work in "today's dollars". So, if you tell it you're contributing $20k/yr for retirement, and expect to spend $60k/yr in retirement, it will follow CPI inflation and give you numbers in "today's dollars&qu...
by boknows
Tue Sep 09, 2014 9:54 am
 
Forum: Investing - Help with Personal Investments
Topic: 401K calculator in today's dollars
Replies: 3
Views: 443

Re: Retirement simulation tools like cfiresim...

I think that if there was a comprehensive dataset for other countries that was akin to the Shiller dataset, it would be much easier to implement something like that. There are a few things you can do to simulate times that are worse than all US historical times. In cFIREsim or FireCalc, you can adju...
by boknows
Tue Sep 09, 2014 9:49 am
 
Forum: Investing - Theory, News & General
Topic: Retirement simulation tools like cfiresim...
Replies: 1
Views: 451

Re: More Advanced Retirement Calculator?

I'm basically looking for any type of calculator/spreadsheet, retirement or otherwise, that will allow me to significantly increase my yearly contribution amount at year 10 or 15 of a 30-year period. Does anyone know an easy way to do this in excel or of an online calculator that can do it? As ment...
by boknows
Wed Aug 20, 2014 10:41 am
 
Forum: Personal Finance (Not Investing)
Topic: More Advanced Retirement Calculator?
Replies: 8
Views: 1111

Re: Hitting "The Number" too early

It is better to calculate an income stream than a number. I wrote my own calculator which instead of computing a number. It calculates a constant income stream. All calculations are in real dollars, not nominal. I : 1) subtract from my current portfolio balance all current debt/expenses (mortgage/c...
by boknows
Wed Jul 02, 2014 2:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: Hitting "The Number" too early
Replies: 49
Views: 5577

Re: FIREcalc- help wanted from those older than I

I second what prudent is saying. If your expenses are something like 1-2% of your portfolio, of course you're going to see big growth. Then, doubling that, (maybe 3-4% of your portfolio?) it has 1 failure. That's pretty much on par with historical data.
by boknows
Mon Jun 23, 2014 3:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: FIREcalc- help wanted from those older than I
Replies: 12
Views: 1140

Re: Retirement Calculator ?

I have never understood how to use a model that asks the user to input a value for returns and deviation of returns as it would seem that guessing that is the essence of the problem. Yeah, I don't know a TON about the monte carlo simulations, but I do know that there would at least be some value in...
by boknows
Sat May 31, 2014 8:36 pm
 
Forum: Personal Finance (Not Investing)
Topic: Retirement Calculator ?
Replies: 14
Views: 1940

Re: Retirement Calculator ?

cFIREsim and FIREcalc have a decently high learning curve, but they tend to offer the most comprehensive analysis (provided you have all of the necessary input numbers available).
by boknows
Sat May 31, 2014 4:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Retirement Calculator ?
Replies: 14
Views: 1940

Re: firecalc and anticipating worst case scenarios

I'm with longinvest. Variable withdrawal methods make for better success long-term. On a 50-yr investment period, 75% stocks / 25% bonds, and Shiller's data set, $1M portfolio, varying between $30k and $40k spending depending on the market, you can get 100% historical success, with less times where ...
by boknows
Fri May 23, 2014 1:49 pm
 
Forum: Investing - Theory, News & General
Topic: firecalc and anticipating worst case scenarios
Replies: 14
Views: 1393

Re: firecalc and anticipating worst case scenarios

I see a worst case portfolio ending value of $565,000 (1965-1985). I'm not sure if that's in real or nominal dollars. It's in real dollars (as listed at the bottom of the output page). Typically, 1965 and 1966 are the most brutal years to have begun a retirement (historically) due to inflation and ...
by boknows
Fri May 23, 2014 12:45 pm
 
Forum: Investing - Theory, News & General
Topic: firecalc and anticipating worst case scenarios
Replies: 14
Views: 1393

Re: when can I retire when my number keeps changing?

One of the things about SWR's is that they are often modeled by folks as a static number, when in reality people's spending is variable to a degree. Some years you'll have a spike to replace the roof on your home, others you'll pull back spending because the market is doing poorly. Consider googling...
by boknows
Wed Jan 15, 2014 10:21 am
 
Forum: Investing - Help with Personal Investments
Topic: when can I retire when my number keeps changing?
Replies: 17
Views: 2698

Re: Calculating the "return" of a bond (GS10)?

Can you point out how you come up with a price of $90.51 for the 1980 example? ... I just plugged into a bond calculator ... Crucially, I used 9 years instead of 10, otherwise I'd have gotten your [negative] 1% result. My guess is you need to change one of your 10's in your interest formula to a 9 ...
by boknows
Wed Jan 08, 2014 8:54 am
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

This is because the duration of a 10 year coupon bond of 9.1% is about 7 years, so the losses for the zero coupon with duration 10 years are greater and no longer balanced by the interest. boknows: I think your method is mostly right, but it does ignore two things: 1) price appreciation to maturity...
by boknows
Tue Jan 07, 2014 6:48 pm
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

I also need to find some source that states that the GS10 rates used in Shiller's data actually ARE zero-coupon. That seems to be a big deal. GS10 is not zero coupon bond. That was just a simpifying assumption. Zero usually has slightly higher ytm than coupon bond. Like the 10-year is 3.00% the zer...
by boknows
Tue Jan 07, 2014 2:25 pm
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

So, I'm searching more online for examples of if GS10 is a zero-coupon bond, and of course I run across GreyFox's website. Ha... I love BH.org. http://www.lagunabeachbikini.com/index.php/2011/02/18/what-were-historical-real-interest-rates/ What's slightly distressing to hear is this part: A 10-Year ...
by boknows
Tue Jan 07, 2014 1:01 pm
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

linuxizer wrote:I may have missed it, but are you accounting for interest-on-interest as well?


As to not complicate things with running IOI totals, Firecalc and other spreadsheets assume total rebalance every year. So, I'm not sure that's an issue.
by boknows
Tue Jan 07, 2014 12:41 pm
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

So, forgive my naivety about bonds (which is why I'm posting this thread)... but the GS10 Shiller data is an interest rate . From what I'm being told, in calculating a bond's total return, you need to take into account the yield of that bond (from the interest rate), and capital appreciation ... wh...
by boknows
Tue Jan 07, 2014 12:39 pm
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

When I first started playing with the Shiller data, I found that the total return was not calculated for either S&P500 or GS10. So I had to apply the total return formula for a holding period. You buy a security at time t-1 at price Pt-1. During the holding period, you collect dividend Dt. You ...
by boknows
Tue Jan 07, 2014 12:11 pm
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Variable Percentage Withdrawal (VPW)

I wanted to cross-post this thread that I just put up here, as it relates to how the VPW sheet calculates "Bond returns" from the GS10 Shiller Data. I know that longinvest will probably be away for awhile, but does anyone else have thoughts on this formula? http://www.bogleheads.org/forum...
by boknows
Tue Jan 07, 2014 11:46 am
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Calculating the "return" of a bond (GS10)?

So, if true, what does this say to you? Well, if it's true, methods that calculate the return as FireCalc does... are not accurate at all. Like the 1979 example. The old method has 1979 as a 9.1% return on bonds. The new method has it at -1%. That's a big difference. Yes, I know it be wrong. And fo...
by boknows
Tue Jan 07, 2014 11:17 am
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

FireCalc takes the Shiller GS10 data, and simply uses the long interest rate for January of any given year to determine the "return" for that bond. If they are doing that, it definitely sounds wrong to me. I've completely reverse-engineered and recreated Firecalc... so I'm positive that's...
by boknows
Tue Jan 07, 2014 10:41 am
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Calculating the "return" of a bond (GS10)?

Cut-Throat wrote:So, if true, what does this say to you?


Well, if it's true, methods that calculate the return as FireCalc does... are not accurate at all. Like the 1979 example. The old method has 1979 as a 9.1% return on bonds. The new method has it at -1%. That's a big difference.
by boknows
Tue Jan 07, 2014 10:27 am
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Variable Percentage Withdrawal (VPW)

I wanted to cross-post this thread that I just put up here, as it relates to how the VPW sheet calculates "Bond returns" from the GS10 Shiller Data. I know that longinvest will probably be away for awhile, but does anyone else have thoughts on this formula? http://www.bogleheads.org/forum/...
by boknows
Tue Jan 07, 2014 9:30 am
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Calculating the "return" of a bond (GS10)?

So, I've noticed that FireCalc, other online calculators, and a lot of custom spreadsheets on bogleheads use the Shiller GS10 long interest rate as generic "bond" data in their calculations. However, it was posited to me that FireCalc was probably calculating the "return" of the ...
by boknows
Tue Jan 07, 2014 9:29 am
 
Forum: Investing - Theory, News & General
Topic: Calculating the "return" of a bond (GS10)?
Replies: 34
Views: 1403

Re: Variable Percentage Withdrawal (VPW)

So, again, my only concern is for 1-time "expenditures" that folks might list that are large enough to throw things off (upgrading a house, college tuition, etc). I am not proposing changing VPW... just trying to figure out how to integrate it here. Is there no intuitive way to keep these...
by boknows
Mon Jan 06, 2014 12:45 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

To be fair to boknows, he is asking about how to integrate VPW into his cfiresim retirement planning tool; he is not asking me to change the VPW spreadsheet. I did criticize the current VPW integration within cfiresim in respect to social security, pensions and additional spending. I do think that ...
by boknows
Sun Jan 05, 2014 2:48 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

I am doing exactly that !.....My wife and I won't take S.S. for 8 years. We have set aside about $50 grand a year for 8 years or $400 Grand in Cash. When we run VPW we input our starting Portfolio number as VPW Portfolio = Total Portfolio - $400 Grand. Not very complicated at all! What you describe...
by boknows
Sat Jan 04, 2014 9:35 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

In my opinion, cash is not really an investment; it's savings. I would probably give it a growth rate of 0% or maybe a little less. I agree, but people DO put it as part of their AA, so it should be accounted for to include as many people as possible. Currently, it allows for users to put the cash ...
by boknows
Sat Jan 04, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

I can provide a basic version of what I think the VPW is on the development part of the site, and you can see what you think (by looking at the CSV output). That would be neat. http://www.cfiresim.com/dev/input.php is the "development" version of the site. The beginnings of the "Orig...
by boknows
Fri Jan 03, 2014 11:21 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

Yes, this is right. But, if you allow for specific portfolio withdrawals in addition to the percentage withdrawals, you can break this property. I am concerned with the integration of the "Income/Savings/SS/Pension" and "Spending Inputs" sections with VPW withdrawals on the cfir...
by boknows
Thu Jan 02, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

Hi boknows, Unfortunately, cfiresim does not seem to implement the recommended VPW calculation. It implements CVPW. So, because I seem to have to relearn the VPW method every time I talk about it, can you tell me the difference between the CVPW (that I implement in cFIREsim), and the VPW that you s...
by boknows
Tue Dec 31, 2013 2:24 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal (VPW)

You're right, I was trying to cram too much in your worksheet. cFIREsim is indeed a much more complete tool, and this does address my point. The author is a nice guy, very open to suggestions, by the way, maybe we could ask him to display a recommended initial spend when selecting the CVPW method (...
by boknows
Mon Dec 30, 2013 9:22 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Which retirement calculator do you trust?

Please correct me if I'm wrong, but these MC simulations like FireCalc are supposed to account for bad sequences of returns. Do any of them allow you to see just the worst sequence that history had delivered and aim for a WR that would survive that historic worst case ? Thanks, bustoff For starters...
by boknows
Wed Dec 04, 2013 9:34 pm
 
Forum: Investing - Theory, News & General
Topic: Which retirement calculator do you trust?
Replies: 25
Views: 2635

Re: Asset allocation and cash for retirement

dbr wrote:Frankly between 69/31 and 75/25 there is no difference worth discussing.


This is also what I was implying, however looking back it's not entirely clear.
by boknows
Fri Oct 18, 2013 5:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset allocation and cash for retirement
Replies: 11
Views: 1769

Re: Simulating "long" retirements vs. shorter ones.

In the end there is no assurance ANY portfolio will last. If we have hyperinflation as in Germany or Argentina no numbers are safe. Good luck. Obviously this is true, however if we're talking about looking at a situation that will be "no worse than any time in America", then it can be use...
by boknows
Fri Oct 18, 2013 5:33 pm
 
Forum: Investing - Theory, News & General
Topic: Simulating "long" retirements vs. shorter ones.
Replies: 4
Views: 417

Simulating "long" retirements vs. shorter ones.

Bogleheads, A lot of retirement calculator sites that deal with historical data, usually have data going back to 1871 for general market (stock/bond) and maybe 1927 for more diversified asset classes. That means if you simulate every 30 year period, you get 113 "cycles". Or, if you simulat...
by boknows
Fri Oct 18, 2013 3:37 pm
 
Forum: Investing - Theory, News & General
Topic: Simulating "long" retirements vs. shorter ones.
Replies: 4
Views: 417

Re: Asset allocation and cash for retirement

It's still just a matter of your own risk tolerance, no matter how you define that AA. If a "true" 75/25 let'syou sleep at mnight, strive for that. :-)
by boknows
Fri Oct 18, 2013 3:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset allocation and cash for retirement
Replies: 11
Views: 1769

Re: Gut Checking with FIRECalc

The new calculator is really good. I'm definitely not spending enough! It appears Firecalc is down - wonder if its coming back? Firecalc is up for me. Derosa, I don't think I was being as malicious as you perceive. All I was saying was Internet Explorer doesn't support a particular web feature. I w...
by boknows
Fri Oct 18, 2013 3:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Gut Checking with FIRECalc
Replies: 32
Views: 4328

Re: Cellphone upgrade

What you're missing is the concept of buying an unlocked smartphone outright and then buying a prepaid monthly plan from whichever provider suits your fancy, along with your CDMA/GSM phone type. That will likely be cheaper if you don't upgrade phones every 24 months... Exactly this. Buying an unloc...
by boknows
Wed Oct 02, 2013 8:54 am
 
Forum: Personal Consumer Issues
Topic: Cellphone upgrade
Replies: 5
Views: 520

Re: Gut Checking with FIRECalc

Frankly, I'm more concerned with having income during my 50s, 60s and 70s than I am in my 80s and 90s. Most people in their 80s and 90s don't spend all that much money, particularly on anything "fun", if they happen to make it that far. That's why FIRECalc provides different spending mode...
by boknows
Fri Sep 06, 2013 6:05 am
 
Forum: Personal Finance (Not Investing)
Topic: Gut Checking with FIRECalc
Replies: 32
Views: 4328

Re: Gut Checking with FIRECalc

It appears another Boglehead, who I hope will chime in on this thread, has reverse engineered FIRECalc, added a few features (like a chart you can hover over to get information about specific cycles), and at least for now updates regularly. This new calculator is at http://cfiresim.com For what it'...
by boknows
Thu Sep 05, 2013 8:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: Gut Checking with FIRECalc
Replies: 32
Views: 4328

Re: Variable Percentage Withdrawal

Just for some clarity: Is the VPW calculation simply a function of Age and AA? For instance, I unprotected the cells of your sheet and expanded the VPW table out to age 25-99, just for giggles, and it seems to give the exact same calculation at Age 40 as the table did when 40 was the starting point...
by boknows
Wed Aug 21, 2013 4:04 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Variable Percentage Withdrawal

Just for some clarity: Is the VPW calculation simply a function of Age and AA? For instance, I unprotected the cells of your sheet and expanded the VPW table out to age 25-99, just for giggles, and it seems to give the exact same calculation at Age 40 as the table did when 40 was the starting point....
by boknows
Wed Aug 21, 2013 12:18 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56356

Re: Finding decent mean/stdev data for Monte Carlo sims

Food for thought for the OP: When I built my MC simulator, I heavily relied on this article: http://www.prospercuity.com/modified-distributions.htm . It does a good job about step-by-step talking points. Also, be aware that I believe most MC sims use the geometric mean and not the arithmetic mean f...
by boknows
Wed Aug 21, 2013 12:01 pm
 
Forum: Investing - Theory, News & General
Topic: Finding decent mean/stdev data for Monte Carlo sims
Replies: 70
Views: 3294

Re: Finding decent mean/stdev data for Monte Carlo sims

Food for thought for the OP: When I built my MC simulator, I heavily relied on this article: http://www.prospercuity.com/modified-distributions.htm . It does a good job about step-by-step talking points. Also, be aware that I believe most MC sims use the geometric mean and not the arithmetic mean fo...
by boknows
Wed Aug 21, 2013 11:10 am
 
Forum: Investing - Theory, News & General
Topic: Finding decent mean/stdev data for Monte Carlo sims
Replies: 70
Views: 3294

Re: Standard Deviation of Portfolio

Don't know for sure, but it seems that "sequence of returns" will affect the "withdrawal" portfolio more than the standard deviation of returns. For example, the following returns would have the same std dev , but the impact on the portfolio would be much greater in port "A...
by boknows
Thu Aug 08, 2013 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: Standard Deviation of Portfolio
Replies: 18
Views: 1392

Re: Standard Deviation of Portfolio

As I said in my initial response, if you want to calculate the standard deviation of a historical portfolio, you just need to apply the STDEV function in Excel (or its equivalent in another software) to a table with annual returns . The drawing down to zero is a red herring that is clouding your th...
by boknows
Thu Aug 08, 2013 11:33 am
 
Forum: Investing - Theory, News & General
Topic: Standard Deviation of Portfolio
Replies: 18
Views: 1392

Re: Standard Deviation of Portfolio

In order to calculate your portfolios expected volatility, you need to know your asset classes expected returns, standard deviation and correlation. I can estimate those numbers, but I don't know the equation to figure out how each asset class affects the overall portfolio. You can't just average t...
by boknows
Wed Aug 07, 2013 8:05 pm
 
Forum: Investing - Theory, News & General
Topic: Standard Deviation of Portfolio
Replies: 18
Views: 1392

Re: Standard Deviation of Portfolio

A lot of folks on here talk about finding the right AA for them that gives them a lower volatility. If one is withdrawing from a portfolio, assuming that you're going to drawdown to $0 by the end of life, how exactly does one calculate this volatility? Since we're potentially taking inflation-adjus...
by boknows
Wed Aug 07, 2013 3:44 pm
 
Forum: Investing - Theory, News & General
Topic: Standard Deviation of Portfolio
Replies: 18
Views: 1392

Standard Deviation of Portfolio

A lot of folks on here talk about finding the right AA for them that gives them a lower volatility. If one is withdrawing from a portfolio, assuming that you're going to drawdown to $0 by the end of life, how exactly does one calculate this volatility? Since we're potentially taking inflation-adjust...
by boknows
Wed Aug 07, 2013 11:05 am
 
Forum: Investing - Theory, News & General
Topic: Standard Deviation of Portfolio
Replies: 18
Views: 1392

Re: Roth ira and target retirement account, what next?

Do you guys suggest that I just keep socking away at the 2050 fund for a few years or until I reach a certain dollar amount? (20k, 50k, 100k etc) or forever?? In my opinion, yes. Once you have enough money in there to have 2 different funds with Admiral Shares (min $10k/each), then you can start pl...
by boknows
Tue Aug 06, 2013 7:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth ira and target retirement account, what next?
Replies: 8
Views: 860
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