Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Help me understand Firecalc
Old 06-25-2013, 11:23 AM   #1
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,569
Help me understand Firecalc

I am currently looking at the "your portfolio" tab on firecalc. Please help me understand why I get dramatically different results for each of the options. (All pre-sets from other tabs remain the same for each option I list below.)

For Total Market option: I have it set to 1927, fixed income is set on long interest rate. Equities v fixed income is 80%. This gets me a survivability of 88.6%, with about $4m.

Mixed portfolio-I have let it with the pre-set numbers. This gets me survivability of 100%, with about $18m. (I REALLY like this!)

Consistent Market growth-Again using the pre-set numbers. This gets me a loss of $1.1m, and 0% success.

Random Performance-Again using pre-set numbers. This gets me 85.6% survivability, with about $8m.

Why are these numbers SO different? Especially between Total Market and Mixed Portfolio?
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
Keim is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-25-2013, 11:39 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
The consistent and random are very different from anything using actual, so I'd expect them to provide different results.

The TM and MP are reasonably close portfolios I suppose, but it just goes to show you how minor changes have a large impact over 30 years. Just try the 'consistent' model with very slight changes and see for yourself.

-ERD50
ERD50 is offline   Reply With Quote
Old 06-25-2013, 12:17 PM   #3
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,569
Quote:
Originally Posted by ERD50 View Post
The TM and MP are reasonably close portfolios I suppose, but it just goes to show you how minor changes have a large impact over 30 years. Just try the 'consistent' model with very slight changes and see for yourself.

-ERD50
If that is the case, it seems a telling argument for tilting your portfolio, vs simple indexing.
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
Keim is offline   Reply With Quote
Old 06-25-2013, 12:40 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
I suppose it does. Be interesting to tweak those categories to see if there was some better mix.

-ERD50
ERD50 is offline   Reply With Quote
Old 06-30-2013, 04:52 PM   #5
Thinks s/he gets paid by the post
Rustward's Avatar
 
Join Date: Apr 2006
Posts: 1,684
Keim, the consistent annual market growth option does not work.
You can enter whatever you want for market growth (growth of your equities, I believe this is supposed to be), and Firecalc treats the entire portfolio as fixed income.

So, using the preset numbers, what you are actually getting is
Spending: 30000
Portfolio: 750000
Years: 30
Expense Ratio: 0.18%
Fixed Income Return: 4%
Inflation: 3%

Whatever rate you enter (or use default) for Market Growth is completely ignored. Additionally, for this to work the way it should, Firecalc needs to know how much of your portfolio is in equities, and how much is in fixed income. There is no place to enter this data.
Rustward is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


» Quick Links

 
All times are GMT -6. The time now is 10:41 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.