Two good retirement planning tools



I like both of these online tools. I also use the one which is part of my Fidelity account. All three give similar results if I put the same inputs in.

Fidelity has offered some version of a Monte Carlo simulation like FireCalc for a long time. I used Fidelity’s when I was in the planning stages of my current retirement.

The accuracy is due to the law of large numbers, but the data is historical and… subject to the effects of a black swan.

FIRECALC does not do Monte Carlo… it actually looks at actual holding periods for 1871 (?) to present. It’s not a simulator, it doesn’t make assumptions about the probability density function… Gaussian bell-shaped curve is a standard and wrong assumption.

By analyzing historical price data, you can determine the drift, standard deviation, variance, and average price movement of a security. These are the building blocks of a Monte Carlo simulation.

Also see: FireCalc = Monte Carlo simulator - Early Retirement & Financial Independence Community

All models are wrong. Some are useful.

All models of future events are guesses, some are lucky guesses.

Predicting history is easy, predicting the future is a tad more difficult. :nerd_face:

Even ballpark models based on historical data are better than what most people do, which is nothing, unfortunately.

I think the biggest investing mistake people make is the failure to diversify. Many focus on the stock market, mutual funds and bonds and pass up things like real estate, metals and cash. Then when that basket takes a hit, it hurts a lot more than it should. It also leads to panic and making dumb decisions to fix things.

Well said! They should also have international equities, although Land War in Europe makes that daunting at the moment. Overwhelmingly, US investors suffer from home country bias. I also am a Limited Partner in some oil and gas wells. First well hit!

I invested in some gas wells as a LP when I lived in TX in the 70’s and 80’s. I had mixed results and since it’s a young man’s game, I’ve long since moved on to more mundane things.

I’m sure the odds have changed with horizontal drilling and fracking since the 80’s. I would think the chances of one coming into production is much better now, but the initial spurt in production and leveling off of them has to be an interesting and prickly thing to go through as a LP.