Mid year growth

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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cobson
Posts: 5
Joined: Fri Jul 28, 2017 5:52 am

Mid year growth

Post by cobson » Fri Jul 28, 2017 6:01 am

FRP is a great tool. Even us non-US users can get a lot out of it by just ignoring the US tax side of it.

I came across an interesting article on growth rate calculations:

http://www.pralanaretirementcalculator. ... rowth.html

Am I right in thinking that FRP takes and end-of-year approach ? I wondered what your thoughts were on the mid year growth solution proposed ?

Thanks.

jimr
Posts: 518
Joined: Thu Feb 28, 2008 6:48 pm

Re: Mid year growth

Post by jimr » Fri Jul 28, 2017 7:48 am

FRP handles all cash flows (eg net expenses/savings) at the beginning of the year and calculates portfolio growth at the end of the year.

So based on the article, I think that means that during the accumulation phase FRP may be a little optimistic and during the deccumulation phase, FRP may be a little pessimistic.

I haven't done much research on this myself, but the article doesn't mention what the difference is in the probability of success between the two methods. To me, what happens with that would probably be more interesting.

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