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...
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.
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...
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).
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 ...
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 ...
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...
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 ...
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...
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...
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 ...
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.
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...
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 ...
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...
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...
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...
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.
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/...
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 ...
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...
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 ...
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...
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 ...
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...
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...
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...
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 (...
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...
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...
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...
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...
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...
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...
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'...
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...
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....
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...
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...
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...
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...
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...
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...
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...
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...
Are you assuming some sort of cash-vehicle for your portfolio that gets a static % gain? If you're trying to adapt your model to be effective during an equity downturn or big upswing, you should check out the discussion over at this thread: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=12...
Before anyone can answer that question for you, you need to ask yourself: what's your risk tolerance and what asset allocation (%) are you looking to achieve. After that, finding funds that match that asset allocation are easy. So, you're currently 90/10. Are you ok with that allocation/risk over th...
It depends on the field that you retired from. A lot of folks on these forums would mention to try and pick up some sort of part-time/consulting gig within the industry that you retired. It'd probably pay more than any random job you pick up. It's certainly a good way to protect your portfolio.