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Fidelity's rip planner uses monte carlo. Although firecalc added a monte carlo simulator its real claim to fame is it uses actual historical data in sequence.
The default for firecalc is historical not monte carlo.
It is better to think of firecalc as a historical data simulator and the fidelity rip planner as a monte carlo planner.
It is cleaner that way.
I just checked the firecalc webpage and it seems there is no doubt that the calculator is strictly based on historical data. A true Monte Carlo simulator relies on probability distributions based on historical data but is a totally different type of calculator.
We went with purchasing an annuity. The last thing I think you want to do in your retirement is become a money manager. I always chuckle at young lottery winners who quit their job and take the cash settlement. Now you have a new job = managing your money.
There are annuities that can grow over time. There are also annuities where they will grow and p[low the money back in and you can defer payments til later years.
Good luck.
We went with purchasing an annuity. The last thing I think you want to do in your retirement is become a money manager. I always chuckle at young lottery winners who quit their job and take the cash settlement. Now you have a new job = managing your money.
There are annuities that can grow over time. There are also annuities where they will grow and p[low the money back in and you can defer payments til later years.
Good luck.
I make about one transaction on my mutual fund accounts in a year. A large portion of my portfolio is in a managed account and I have not touched that account in the 4 years I have been retired. A well diversified, balanced portfolio often does best when left alone.
I just checked the firecalc webpage and it seems there is no doubt that the calculator is strictly based on historical data. A true Monte Carlo simulator relies on probability distributions based on historical data but is a totally different type of calculator.
actually yes the default is historical and it is known for historical data being used as it mimics the trinity study BUT there is an option under portfolio to randomize performance,
if you were not looking for it you would miss it but there is that option box .
for monte carlp though , fidelity's rip is a much better choice.
i like to use both because with historical many over lapping time frames influence each other in combo's that produce results that are not really accurate views unless they happen in that order again ,highly unlikely .
as an example a 17 year bull market of almost 14% cagr returns from 1987 to 2003 influenced multiple intersecting 30 year time frames making them look better than they really would have been without intersecting that time frames unique performance
on the other hand monte carlo can have combo's that have no chance of ever being bedfellows .
usually monte carlo gives lower success rates for that reason. not by a lot but they tend to run lower.
Last edited by mathjak107; 04-20-2015 at 02:15 AM..
I make about one transaction on my mutual fund accounts in a year. A large portion of my portfolio is in a managed account and I have not touched that account in the 4 years I have been retired. A well diversified, balanced portfolio often does best when left alone.
same here , we have one or two changes in a year and the best thing is i don't even have to think about them . i get an e-mail from my newsletter and just click and swap.
We went with purchasing an annuity. The last thing I think you want to do in your retirement is become a money manager. I always chuckle at young lottery winners who quit their job and take the cash settlement. Now you have a new job = managing your money.
There are annuities that can grow over time. There are also annuities where they will grow and p[low the money back in and you can defer payments til later years.
Good luck.
you can do anything with annuities you like -just pay for the option and poof it is there.
but my opinion is they can be very powerful tools when combined with your own investing to replace bonds and cash.
but as a proxy for a growth or equity investment they still stink.
There may be better websites for Monte Carlo simulations but I use Firecalc. I would guess a google search would provide many other choices.
I tried it and I am not getting the results you claim. You said that your mortgage plus portfolio is a guaranteed win, which means it should in 100% of the runs maintain a positive net value after taking mortgage payments out. I put in $200K portfolio and for annual spending I used 12 * the monthly payment on a $200K 30-year mortgage at 3.75% APR. So this is $200K portfolio and $11,115 annual spending. It shows a couple of runs going negative before year 30, even after turning off the inflation adjustment to account for the fact that the mortgage payments are fixed in nominal terms.
Which is to say, your mortgage arbitrage is not guaranteed.
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