Changing the Investing Style

A retirement planning tool is only as good as its assumptions and inputs. Share your thoughts or ask questions about the internals of the simulation, built in planner assumptions, or planner inputs.
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Gomps
Posts: 2
Joined: Sun Oct 13, 2019 12:14 pm

Changing the Investing Style

Post by Gomps » Sun Oct 13, 2019 1:23 pm

In the summary view, the Investing Style of Moderate Risk indicates the stocks/bonds/international allocation is 41%/45%/14%. The stock allocation increases or decreases as the investing style is made more aggressive or less aggressive. As I get older I am moving from a more plain Jane 60/40 stocks/bonds allocation to a 50/50 stocks/bonds allocation which would seem to be somewhere between the settings for Above Average Risk and Moderate Risk. Is there some other setting I can tweak to better approximate a 50/50 investing style? When the Custom investing style is selected it's not possible to change the asset allocation, only the average return and the standard deviation. Thanks.

jimr
Posts: 523
Joined: Thu Feb 28, 2008 6:48 pm

Re: Changing the Investing Style

Post by jimr » Sun Oct 13, 2019 5:07 pm

The planner only uses the Average Return and Standard deviation inputs. The investment styles and corresponding asset allocations are only shown as example portfolio that might be used to generate the return/standard deviation pair that ultimately gets fed into the planner.

So setting an avg return/std dev using the custom option gives the planner everything it needs to run the simulation. You can also use the upper table in additional inputs to set multiple return/std dev pairs to use over multiple ranges of years (eg if you plan to move to an even more conservative portfolio later on).

Gomps
Posts: 2
Joined: Sun Oct 13, 2019 12:14 pm

Re: Changing the Investing Style

Post by Gomps » Tue Oct 15, 2019 3:11 pm

Thanks Jim. I will play around with various Average Return and Standard deviation inputs.

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