Multiple rates of taxable return

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marty48
Posts: 2
Joined: Mon Nov 06, 2017 1:35 pm

Multiple rates of taxable return

Post by marty48 »

FRP is an amazing tool! Thanks to those who developed and supported it as well as those who contribute their support here.

I have two rates of taxable retirement income. One is stable value returning about 3% and the other rate varies with market conditions. The balance in each investment is quite different. I can envision a couple ways putting this into additional inputs but I am curious how those with more experience would tackle this.

Thanks!
Marty
jimr
Posts: 699
Joined: Thu Feb 28, 2008 6:48 pm

Re: Multiple rates of taxable return

Post by jimr »

I'd suggest trying to determine the expected return and standard deviation of the combination of the assets and modeling them together as a combined portfolio using a single return/std dev.

You can use a tool like Portfolio Visualizer to get the estimated mean return/std deviation for the combined portfolio:
https://www.portfoliovisualizer.com/bac ... allocation

With this tool, after you enter the assets and percents and run the tool, click on the metrics tab and find the Mean Return (annualized) and Volatility (annualized) to get the values to use for return and std dev. If the tool doesn't have a way to input the exact assets you're trying to model, the next best approach is to choose assets that the tool knows about that have similar characteristics.

I think there are several other onine portfolio backtest tools out there, but I haven't done a search in a while. In general, it's a good idea to use multiple tools to make sure they all give roughly the same answer.
marty48
Posts: 2
Joined: Mon Nov 06, 2017 1:35 pm

Re: Multiple rates of taxable return

Post by marty48 »

Thanks, I will try this out!
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