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i-orp and yields
Old 01-24-2013, 10:09 PM   #1
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i-orp and yields

For those of you who use i-orp, what do you put for expected yields in the tax-sheltered, Roth, and taxable categories? In an attempt to be conservative I've been putting 5%. Is that conservative enough, or should I go even lower?

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Old 01-25-2013, 01:11 AM   #2
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It's probably not a bad place to start.

It partly depends on how those categories will be invested: equities, bonds, or some mix. Then I would see how that mix has performed long term, or over a period similar to what you think the future x years will be like (polish up yer crystal ball! ) to get an idea of a range of values to try.

FWIW, I did run ORP with 5% in all those categories, and then ran it @ other values down to 1% real return (I haven't run ORP in a while, so I forget off the top of my head how it's set up to work).

I tend to run those things on the conservative to ultra-conservative side. I'm not so concerned with the great years; I'm more concerned about getting through periods of lean years.


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Old 01-25-2013, 06:47 AM   #3
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With the expectation of a long life, whenever I do projections I assume investment returns of equal to or just slightly above the inflation rate, which I generally peg at 3.5% for the foreseeable future.

With that as a baseline, I can move both inflation and returns up or down to investigate alternatives.
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