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Retirement Discussions / Retire Early CampFIRE
|Subject: Re: retire early study||Date: 2/9/2000 2:15 AM|
|Author: 4aapl||Number: 3483 of 847623|
I use solver all the time, though I think i have yet to use it in my financial sheets.
But, one use would be in my calculating stock price vs port value needed. I have figured out how much of an annual budget I need, and can pick one of the common safe withdrawl rates. I'm closing in on the 5% mark, so lets use that. Using that rate I can figure what my port value is right now. Cake so far, right.
Right now my port is made up of 75% or so of one particular stock. Not very diversified, but I have yet to find a better one in terms of risk/reward over the last 2 years....and since I'm still at a high paying job I am willing to take the risk of a non-diversified portfolio.
Anyways, back to my point. My port value changes quite a bit with this stock....lets call it AAPL :) So, one easy caluculation is to figure out what my port would be worth if AAPL went to 135, assuming all others stayed the same. Another easy calculation, but here is where solver comes in.
Let's say i want to find the exact value AAPL needs to get to so that my port value would give the $ I need at that 5% rate. In solver I can set it to vary the value of the cell with the current price that AAPL is at, such that the port value is equal to a specific value. A few milliseconds later (results depend on your machine) it gives you the solution, and asks if you want to keep this value or if you want to leave it how it was.
We used this countless times in our ChE courses. Anytime where an itterative approach came into play, it made more sense to just let Excel do this. Everything from how many trays were needed in a distillation column to figuring out and graphing the temperature profile in a PFR (wow, I still remember this stuff barely) type reactor.
As far as using it for calculus, there were many brute force methods using itterative approaches that they would teach during the first few weeks of class, before showing the easier methods that were slightly more abstract. Open up a calculus book and look at that first chapter or 2 and you should be in luck.
Also, take a look at all of the functions that excel has. Some have rather abstract names, but many can be quite useful. I use the XIRR function to give annualized return rates on my port while making monthly additions to it, and use the more common SUM and AVERAGE functions all over the place. But take a look there and you might find one or 2 to do some of the calculus type stuff that you want.
Just finished playing with #'s in the CA and AZ tax forms, so I'm a little frazzeled. (wouldn't it be nice if they used the same methods, but just different values...along with being nice to those of us with LTCG and not just calling it regular income........)
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