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Fire Calculator 40 year observation
Old 03-14-2012, 07:33 AM   #1
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Fire Calculator 40 year observation

As I go thru the use all calculator stage found this information interesting from Fireclac.
Outside of retiring in 1929 one sure would have a bunch at the end.
Would love to see one of these except 1929 repeat it self.

Input
$1,400,000 Mixed Portfolio $60K annual spend all other defulted to fire calc presets No other income
18 times portfolio worth less $1.4m after 1st year.
of those 10 recovered in 2nd year of retirement
of those 2 recovered in 3rd year
of retirementof those 1 recovered in 4th year of retirement
of those 2 recovered in 5th year of retirement
of those 1 recovered in 9th year of retirement
of those 1 recovered in 16th year of retirement
of those 1 Never recovered 1929 retiement.
20 x Porfolio was worth more than $1.4m after year 1
only 5 of these were ever worth less than $1.4M over the 40 year period.
of those 5 all recovered to more than $1.4M
2 recovered in the next year
1 recovered in year 6 after the slip below 1.4M
1 recovered in year 16 after slipping below $1.4m
No Portfolio in this category went below 1.4M after 18 years

Outside of 1929 ending Portfolio value was between $7.5M and $109M
Attached Files
File Type: xls CVT1A (version 1).xls (39.0 KB, 14 views)
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Old 03-14-2012, 08:07 AM   #2
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While nothing is certain in life, I'd take those odds of dying rich any day.
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Old 03-14-2012, 09:04 AM   #3
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Originally Posted by traineeinvestor View Post
While nothing is certain in life, I'd take those odds of dying rich any day.
It's better to die with money, than live without it ...

(That's my story, and I'm sticking to it)...
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Old 03-14-2012, 09:11 AM   #4
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It is interesting to see that the Mixed Portfolio has 1 failure in this time frame (1929, as pointed out by the OP), while the 75/25 has 26 failures.

I'd be hard pressed to dump money into long term bonds at this point though.

-ERD50
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Old 03-14-2012, 10:02 AM   #5
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It's better to die with money, than live without it ...
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Could not agree more!
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Old 03-14-2012, 10:13 AM   #6
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Originally Posted by ERD50 View Post
It is interesting to see that the Mixed Portfolio has 1 failure in this time frame (1929, as pointed out by the OP), while the 75/25 has 26 failures.

I'd be hard pressed to dump money into long term bonds at this point though.

-ERD50
What is the Asset allocation of the mixed portfolio?
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Old 03-14-2012, 10:18 AM   #7
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What is the Asset allocation of the mixed portfolio?
The AA is listed on the "Your Portfolio" tab in FIRECalc.
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Old 03-14-2012, 10:32 AM   #8
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The AA is listed on the "Your Portfolio" tab in FIRECalc.
So I'm assuming the OP used the default numbers that were in the mixed portfolio (?) because they are customizable.
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Old 03-14-2012, 11:20 AM   #9
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Just to state the obvious...

For longer time frames, there far fewer independent data time frames available. Therefore, the quality of the results you project are quite a bit less reliable than for shorter spans. In other words, the variance of the results is expected to be significantly higher.

Perhaps therefore, You should take these results as entertainment rather than on how things will turn out.

Your mileage may vary
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Old 03-14-2012, 12:24 PM   #10
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Just to state the obvious...

For longer time frames, there far fewer independent data time frames available. Therefore, the quality of the results you project are quite a bit less reliable than for shorter spans. In other words, the variance of the results is expected to be significantly higher.

Perhaps therefore, You should take these results as entertainment rather than on how things will turn out.

Your mileage may vary
From FIRECALC FWIW...
Quote:
FIRECalc looked at the 101 possible 40 year periods in the available data...
versus 111 for a 30 year run. Variance in results significantly higher?
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Old 03-14-2012, 12:55 PM   #11
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From FIRECALC FWIW...versus 111 for a 30 year run. Variance in results significantly higher?
FireCalc makes 101 periods out of the available data. However the periods are not independent. They are quite well correlated. That's true also for the 30-year periods but less so.
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Old 03-14-2012, 01:57 PM   #12
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I ran mine for a 40-year period and had the following results:

1. the 80/20 total market (bonds in 30-year treasuries) had 17 failures (83.2%)

2. Mixed portfolio #1 (60/40 - 5% SM VALUE, 40% S&P 500, 15% LG VALUE, 35% LT TREASURY, 5% ST TREASURY) had 3 failures

3. Mixed portfolio #2 (70/30 - 5% SM VALUE, 40% S&P 500, 25% LG VALUE, 25% LT TREASURY, 5% ST TREASURY) had 1 failure

4. Mixed portfolio #3 (80/20 - 10% SM VALUE, 45% S&P 500, 25% LG VALUE, 15% LT TREASURY, 5% ST TREASURY) had 0 failures
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Old 03-15-2012, 12:57 PM   #13
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All,
To confirm I did use the Fire Calc's defualt mixed portfolio when I ran the original spreadsheet.

I am waiting for rates to go up to square up our Bond allocation. Currently around 5% bonds with 20% cash set aside for bond purchases. 75% equities thru a mix mutual funds.

I do enjoy market history study as entertainment as well as some tool to try and predict future outcomes because many time the market does repeat itself but may not always. Only thing for sure is it will go up and down.
Most calculators are telling me to we are FI now.

It will not be long before taking the Leap into ER.

Wife is nurse and looking at some seasonal postions that will make HC available with my PE conditions.

Thanks all
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