Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Which Firecalc "Your Portfolio" option do you use?
Old 02-04-2018, 03:33 PM   #1
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 770
Which Firecalc "Your Portfolio" option do you use?

I'm curious as to which option on the 'Your Portfolio' tab most people use in FC.

1. Total Market
2. Mixed Portfolio
3. Consistent Growth
4. Random Performance

I'm guessing the answer is #1. If so, do you also do FC runs using option #4 to simulate low returns (as some 'experts' like to predict)?

I use Flexible Retirement Planner mostly and I've been using an average return of 5% with a deviation of 2%. What are your thoughts on this setting? Is it being too pessimistic?

Thanks for the feedback.
Carpediem 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 02-04-2018, 03:46 PM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
Looks like a perfect question for a poll.
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 02-04-2018, 03:55 PM   #3
Thinks s/he gets paid by the post
USGrant1962's Avatar
 
Join Date: Dec 2016
Location: DC area
Posts: 2,479
Quote:
Originally Posted by REWahoo View Post
Looks like a perfect question for a poll.
Make sure the poll can take multiple responses.

I do #1 and #4. #2 is not too useful because it is missing too many asset categories, and #3 is not too useful because markets just don't exhibit consistent growth.

IIRC, the standard deviation of a 60/40 portfolio is like 11%, not 2%. Something like 5% nominal return is reasonable with today's valuations. But what inflation rate did you assume? Real return is what matters over the long haul.
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged

"All models are wrong, some are useful." - George Box
There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
USGrant1962 is online now   Reply With Quote
Old 02-04-2018, 05:10 PM   #4
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 770
Quote:
Originally Posted by USGrant1962 View Post
. But what inflation rate did you assume? Real return is what matters over the long haul.
I am using 3% inflation with 2% deviation.
Carpediem is offline   Reply With Quote
Old 02-04-2018, 09:07 PM   #5
Thinks s/he gets paid by the post
USGrant1962's Avatar
 
Join Date: Dec 2016
Location: DC area
Posts: 2,479
Quote:
Originally Posted by Carpediem View Post
I am using 3% inflation with 2% deviation.
I haven't used FRP in a while, but just re-downloaded it. If you look at the first page under investing style, and pick Moderate Risk, it will show you a historical 55/45 portfolio with 8.0% return and 9.9% standard deviation. You may wish to lower the return based on current valuations, but that won't change the SD.

I see that FRP also has an SD for inflation, but I don't know what that number would be.

A 3% inflation estimate is reasonable for forecasting. It is actually higher than the long-term U.S. average of about 2.25%, but that average includes substantial periods of deflation prior to WWII. Conversely, almost all periods of inflation higher than 3% were associated with major wars - WW1, WW2 and Vietnam/Cold War. See this graph US Inflation Rate
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged

"All models are wrong, some are useful." - George Box
There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
USGrant1962 is online now   Reply With Quote
Old 02-05-2018, 08:02 AM   #6
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 770
Quote:
Originally Posted by USGrant1962 View Post
I haven't used FRP in a while, but just re-downloaded it. If you look at the first page under investing style, and pick Moderate Risk, it will show you a historical 55/45 portfolio with 8.0% return and 9.9% standard deviation. You may wish to lower the return based on current valuations, but that won't change the SD.
Yes, I actually use the Custom setting for Return % (5%) and Std Deviation % (2%) because I felt the pre-entered percentages were too optimistic.
Carpediem is offline   Reply With Quote
Old 02-05-2018, 08:13 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
I use the default options of Total Market and Long Interest Rate and change the equities percentage to 60% to reflect my 60/35/5 AA.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski 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


Similar Threads
Thread Thread Starter Forum Replies Last Post
Can you use FIRECalc to forecast your portfolio? iamjameswalters FIRECalc support 10 11-30-2016 03:14 PM
Online Portfolio Trackers, which do you use? garstud Young Dreamers 30 01-14-2013 08:41 PM
Suggestion: Detailed data for 95% rule option and Bernicke option. Sam FIRECalc support 2 03-25-2007 07:16 AM

» Quick Links

 
All times are GMT -6. The time now is 04:02 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.