FireCalc Weakness?

[Cb]

I don't think this is correct. FireCalc uses total returns for each asset class, so it would implicitly take into account urnealized capital gains and lossses on bonds. What it doesn't do is break-out the income and price-change for each asset class.

Have a look at this post and those that follow:

http://www.early-retirement.org/for...-hapless-y2k-retiree-69942-2.html#post1398601

I don't think this issue has been resolved.

 

[FIRE'd@51]

Have a look at this post and those that follow:

http://www.early-retirement.org/for...-hapless-y2k-retiree-69942-2.html#post1398601

I don't think this issue has been resolved.

I stand corrected. I hadn't read the linked thread carefully before. To do a quick check, I ran FireCalc with zero spending and fees and a 100% 30-yr US Treasury portfolio beginning in 1983 and looked at the year-by-year results in a spreadsheet. The nominal value of the portfolio column never decreased, even though there were several years of negative total return, and the real (inflation adjusted) value only decreased once (2009). My apologies to California Man.

 

[Live And Learn]

Re- longer time horizons in Firecalc. If you want a really real worst case scenario, say for a 40 year horizon, put in a 20 year horizon -- then take the lowest from that and put it into another 20 year horizon. (Or use the average if you don't want to be super negative)

The idea is a shorter time horizon gives you more "runs" -- ie, if you put in a 60 year time horizon then you are culling out the randomized last 59 years from your data set.

I agree that the longer horizons give overly rosy results. But two back to back 20 year FIRECalc runs assumes twp back to back worst case scenarios, which I find overly gloomy and hopefully unrealistic.

To combat this I use one 30 year run, look at the lowest remaining value and decide if it will be enough to get me through the next 10 years assuming that all I do is keep up with inflation (ie: I take the lowest value and divide by 10).