Yes, You Can Supercharge Your Portfolio, Page 15.People are forever bragging about their investment returns. Never mind all the cases where they're conveniently forgetting to mention all their losses, are just plain wrong, or are outright lying. This talk is meaningless unless you know how much risk they took to get the returns they brag about. The guy at the next locker whose portfolio was up 15 percent last year while yours was up only 7 percent? He may not know it, but for the chance he was taking, he should have been up 30 percent. Knowing returns without understanding risks is like knowing only one team's score in a football game.
Yes, but it also requires faith that the future will be like the past, which a lot of people are increasingly uneasy about assuming.Don't have to actually plan this do we? Doesn't Firecalc simply use historical results?
That's the way I feel as well. DH and I are both retired and our WR is 3%. We could take more, but there is not a need.As long as I can get at least 3% real return I'll be happy.
Don't have to actually plan this do we? Doesn't Firecalc simply use historical results?
Before going on vacation for a week, you ask your spacey friend to water your ailing plant. Without water, the plant has a 90 percent chance of dying. Even with proper watering, it has a 20 percent chance of dying. And the probability that your friend will forget to water it is 30 percent. (a) What’s the chance that your plant will survive the week? (b) If it’s dead when you return, what’s the chance that your friend forgot to water it? (c) If your friend forgot to water it, what’s the chance it’ll be dead when you return?
Although they sound alike, (b) and (c) are not the same. In fact, the problem tells us that the answer to (c) is 90 percent. But how do you combine all the probabilities to get the answer to (b)? Or (a)?
“[He] was visibly nervous while trying to figure out what he would tell the woman. After mulling the numbers over, he finally estimated the woman’s probability of having breast cancer, given that she has a positive mammogram, to be 90 percent. Nervously, he added, ‘Oh, what nonsense. I can’t do this. You should test my daughter; she is studying medicine.’ He knew that his estimate was wrong, but he did not know how to reason better. Despite the fact that he had spent 10 minutes wringing his mind for an answer, he could not figure out how to draw a sound inference from the probabilities.”
I see almost half the respondents said 2.1 to 4 percent. I wish that was divided even finer. It would be interesting to see.