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FIRECalc ? -  5 yr treas vs commercial
Old 03-20-2005, 04:33 AM   #1
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FIRECalc ? -  5 yr treas vs commercial

Sorry if this has been discussed, but the income the calculator tells me I can acheive with a 95% success rate is quite a bit less using the assumption of commercial paper for my fixed income holdings compared to using 5 year treasuries? I would think that commercial paper pays more interest than treasuries, so the opposite would be the case. I can only suppose that this has something to do with the yeild curve and the duration of the commercial paper, but can't quite figure the details.

How would this change if a person were using something like an intermediate or total bond fund?

Enlightenment on this would be helpful. Thanks.

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Re: FIRECalc ? - *5 yr treas vs commercial
Old 03-20-2005, 04:45 AM   #2 Founder
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Re: FIRECalc ? - *5 yr treas vs commercial

Take a look at

Short version: there were no such things as 30 year Treasuries before 1925, and no such thing as 5 year Treasuries before 1953. Simply leaving those out would result in too little data for good calculations.

After discussions with whoever was paying attention back when this was all being done, we decided to use the average of commercial paper and the theoretical TIPS calculation for missing years.

Often uninformed, seldom undecided.

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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