No. of Recommendations: 0
I'm a little surprised this hasn't been brought up yet (Or maybe I missed it and it was determined to be Ho-hum?)

Here's a discussion from some people concerned about the inner working of FireCalc & its cousin cFiresim. http://www.cfiresim.com/input.php especially with regards to how bonds were calculated, which lead to Mr Firesim researching it and coming up with a "new and improved" ie more realistic way of calculating a safe withdrawal rate. The results are bad. The new safe withdrawal rates are way lower than FireCalc et al have been telling us.

http://www.cfiresim.com/phpbb/viewtopic.php?f=2&t=119


FireCalc

I used 1 Mil Portfolio split 50/50 stock/long interest rate, .3 fees to test. The 100% SWR for FireCalc is $36,582

Using 5 yr treasuries the SWR is $37,007. Using 30 yr Treasuries SWR was $36,074

In FireSim the asset classes are a bit different.

Using a 50/50 Stocks/bonds AA the SWR was: $32,530.55

Quite a variance.

Anybody have anything to say or do you see anything here I missed?
Print the post Back To Top
No. of Recommendations: 0
FCorelli asks,

Using a 50/50 Stocks/bonds AA the SWR was: $32,530.55

Quite a variance.

Anybody have anything to say or do you see anything here I missed?

</snip>


You'd really have to look at the data set each program is using to tell what's going on.

In terms of SWR, the sweet spot for bonds is 1 to 2 year maturity. Anything longer than that tends to give you a lower SWR.

Also, you can put together a portfolio at Vanguard for 10 basis points in annual fees, why are you using 0.30 (30 basis points)?

intercst
Print the post Back To Top
No. of Recommendations: 0
That's another thing I always just take for granted because nobody else asks any questions. "Bonds". Like what do they mean by "Bonds"? There's more than one way to skin a cat with "bonds".

And in FireCalc they allow use of something called a "Long interest rate". I can't find that explained anywhere. At least not by using that title. The description in Firecalc seems to imply it's a generalized MMF or bank saving account rate. A "return on cash" more or less which the other calculator just throws in the towel on.

The .3 fee rate? I like allowing for "leakage". Measure with a micrometer, cut with a baseball bat. Real Life can't be cut so close so I throw in a "slop factor". Totally pulled out of a hat.
Print the post Back To Top
No. of Recommendations: 0
FCorelli writes,

And in FireCalc they allow use of something called a "Long interest rate". I can't find that explained anywhere. At least not by using that title. The description in Firecalc seems to imply it's a generalized MMF or bank saving account rate. A "return on cash" more or less which the other calculator just throws in the towel on.

</snip>


The "long interest rate" usually refers to the yieled on 30-year Treasury bonds.

The original REHP Excel spreadsheet on which FIRECalc is based used 3 to 6 month commercial paper as the fixed income data series. The yield on that should approximate what you'd get on a Money Market Fund.

intercst
Print the post Back To Top
No. of Recommendations: 0
The yield on that should approximate what you'd get on a Money Market Fund.

Thanx. That is the most cogent definition out of all these various calculators and their asset allocations, and it's what I always default to.
Print the post Back To Top