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Add Int'l equities to FireCalc = increased SWR's?
Old 02-25-2004, 06:54 PM   #1
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Add Int'l equities to FireCalc = increased SWR's?


I've spent a bit of time browsing Les Antman's excellent personal finance forums and have come to the conclusion that splitting my equity portfolio 50/50 US Total Mkt & Total Int'l via low-cost index funds is the way to go.

I know that there have been many suggestions for adding various features to the FireCalc SWR machine, but I suspect that we might see a meaningful increase in SWR's if we were able to add in various amounts of international equites. I also know that a frequently cited difficulty with evaluating international equities from a historical perspective is the dearth of solid data prior to 1970 or so.

I mentioned this in a thread on Les' Retirement Forum, but he countered that accurate longer term (~100 years) of international equity returns data is available:

Is there any chance you could have a look into the practicality of including an International index in FireCalc? In other threads Les points out that a US investor in 1929, if he had split his porfolio 50/50, would have been "whole" within 5 years (allowing for deflation). Same deal with a Japanese investor in 1990. My guess is that a 50/50 allocation might have improved SWR's in the troublesome period in the 1960's as well.

Your thoughts?


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Re: Add Int'l equities to FireCalc = increased SWR
Old 02-26-2004, 01:49 AM   #2 Founder
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Re: Add Int'l equities to FireCalc = increased SWR

You have a very good point - added types of investments would allow fine tuning of portfolios and perhaps a starting retirement strategy with an increased withdrawal.

As Less Antman points out in the link you provided, data on the international markets can be purchased. But as he also points out, a free calculator such as Firecalc needs to use free data.

I looked into buying data several years ago. I don't even recall the various places I looked, but generally, the price correlated with the quality of the data, charging either on a per-use basis or on an annual basis, with prices appropriate to their intended customer base -- the research departments of mutual funds and brokerage houses I guess.

My inquiries asking them to please give it to me free were not answered in most cases. (I don't know why not. All I wanted to do was to give the results away so we could stop paying THEIR customers for the service...)

One data provider assumed I was doing written reports for clients, and said they would charge $45 each time I used their data for a report.

So at this point, I don't see adding additional asset classes.


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Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. Mark Twain
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Re: Add Int'l equities to FireCalc = increased SWR
Old 02-26-2004, 02:36 AM   #3
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Re: Add Int'l equities to FireCalc = increased SWR

Wow! ...I don't blame you one little bit.

I think I'll try contacting the prof's Les mentions. They also recently published a draft of a paper that's generated a fair amount of discussion on the ER boards in which they suggest that future returns will likely be lower. Maybe they'll be a bit more generous with the worldwide returns data they've compiled.

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