### Correct standard deviation

Posted:

**Wed Dec 30, 2015 5:57 am**I am enjoying using the planner and have learned a lot from it. I thank you for providing it to the community.

One question I am struggling with is the correct standard deviation to use for a custom analysis. Your various investing styles have a fixed rate of return and a standard deviation associated with them. However, the rate of return of some of them may be too high. For example, my portfolio is an above average risk portfolio but a more conservative estimate of rate of return is 7 percent, and this is close to my historical average. Many investment advisors say this is a good number to use for rate of return, even with an above average risk portfolio.

While one can debate this, what standard deviation should I use if I reduce the rate of return to 7 percent. Do I keep the SD associated with the above average risk portfolio? And how exactly did you assign the various SD's to the various portfolios.

Thank you for your help. The fact that you have me thinking in these terms is so helpful to me as it is a real education and eye opener when one sees how much a little change can alter outcome.

DB

One question I am struggling with is the correct standard deviation to use for a custom analysis. Your various investing styles have a fixed rate of return and a standard deviation associated with them. However, the rate of return of some of them may be too high. For example, my portfolio is an above average risk portfolio but a more conservative estimate of rate of return is 7 percent, and this is close to my historical average. Many investment advisors say this is a good number to use for rate of return, even with an above average risk portfolio.

While one can debate this, what standard deviation should I use if I reduce the rate of return to 7 percent. Do I keep the SD associated with the above average risk portfolio? And how exactly did you assign the various SD's to the various portfolios.

Thank you for your help. The fact that you have me thinking in these terms is so helpful to me as it is a real education and eye opener when one sees how much a little change can alter outcome.

DB