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Old 12-27-2013, 04:45 PM   #41
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While I don't disagree, it is worth noting that four of the last five years blew away 8% by a VERY wide margin so I'll admit to a bit of a chuckle when i read that sentence.
Good point. . Retirement funds are starting to get the color back in their formerly pale faces....

BTW, to my former post, one House - not to be named - suggested using a long term return of 6%. To each their own....
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Old 12-27-2013, 04:49 PM   #42
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Good point. . Retirement funds are starting to get the color back in their formerly pale faces....

BTW, to my former post, one House - not to be named - suggested using a long term return of 6%. To each their own....
Interesting. I actually use a 5.5% rate of return for my deterministic plan. It is the historical return for a 60/40 portfolio with a substantial haircut to be conservative. I like 6% better - let the good times roll.
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Old 12-28-2013, 09:16 AM   #43
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Interesting. I actually use a 5.5% rate of return for my deterministic plan. It is the historical return for a 60/40 portfolio with a substantial haircut to be conservative. I like 6% better - let the good times roll.
According to a Vanguard whitepaper, 5.5% is the historical return for an all bonds portfolio. A 60/40 portfolio is 8.7% (1926 - 2012). That is some haircut!

https://personal.vanguard.com/us/ins...io-allocations
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Old 12-28-2013, 09:19 AM   #44
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Yes, I concede it is a bit extreme of a haircut.
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Old 12-28-2013, 09:50 AM   #45
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BUU, I have been a QLP user for a while and feel it is a good directional tool. That said, in reading your post above, I sense you are where I was a few months ago, trying to take the Fidelity RIP concepts and drive them into my QLP model. Where I ended up was coming to terms that there was no way to bridge the stochastic methods (RIP) into the deterministic tools (QLP). I am more comfortable using the two tools independently, and setting goals to improve both models. That approach gives me more year to year targets that I try to hit as I work to improve my success rate across both tools.
What I want to track and forecast using QLP is my assets. That is what will come closest to reality. The picture in the FireCalc chart shows me the historical returns based on my allocation. What I find interesting is that there are always some significant outliers on the positive side that I would consider as low probability. Those impact the historical average for the allocations. I would be inclined to throw out the outliers and pick a point that is close to the average of the remainder and use that as the assumed return rate in QLP rather than the historical average. If I did all the data entry accurately and completely, I would expect the outcome to be pretty close to accurate over a number of years. I would also set my level of spending where FireCalc was 100% successful. I think the outcome will show a positive accumulation throughout retirement in QLP mainly because you are spending for a worst case possibility. Any comments on this approach for synchronizing FireCalc and QLP?
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Old 12-28-2013, 01:29 PM   #46
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Where can I find QLP. Is it included in the Quicken software? I've never used Quicken and would like to try it.
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Old 12-28-2013, 01:39 PM   #47
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QLP is included in Quicken Deluxe or higher.

There is a free sunset edition of Money Plus that has a retirement planning module that is similar to QLP but quite a bit klunkier IMO. I wouldn't bother with it myself.
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Old 12-28-2013, 03:01 PM   #48
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QLP is included in Quicken Deluxe or higher. There is a free sunset edition of Money Plus that has a retirement planning module that is similar to QLP but quite a bit klunkier IMO. I wouldn't bother with it myself.
Thanks. We have lived frugally compared to others in our income level but have never had a defined budget. My resolution for the new year is to be a better planner.
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