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FIREcalc and inflation assumptions
Old 05-06-2009, 01:53 PM   #1
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FIREcalc and inflation assumptions

Am I correct in my assumption that that Firecalc uses historical data for rates of returns on stocks and bonds, but uses a fixed inflation rate for simulation? If this is so it seems to me that what really matters for portfolio sustainability is not inflation, or the rate of return, but the differential between them. Historically when inflation rises so does the yield on fixed income vehicles. Wouldn't it be better to incorporate this differential between historical bonds and inflation in the model?
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Old 05-06-2009, 06:07 PM   #2
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I believe FIRECalc by default uses historical CPI for inflation rate. You can select alternatives -- historical PPI or a fixed rate -- on the "Spending Models" tab.

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Old 05-08-2009, 10:36 PM   #3
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Quote:
Originally Posted by Twild View Post
Am I correct in my assumption
No.

I agree with Coach's explanation.
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