Flexible Retirement Planner Support Forum

Hello everyone,

I am just getting squinted with the calculator and have really enjoyed the functionality and the data it provides. I do have a question regarding what others are using as their input for the "return - std dev" feature. I realize the default is 9.9% so I can only assume this is reasonable? Does this mean that the simulation will run scenarios at annual return rates of +/- 9.9% of the assumed return? If not, can someone explain what this means? Also, what have others used as a "reasonable" number here? I am struck by how impactful this one number is so I am interested in learning more about how to use it correctly. My portfolio is around 65/35 with the intention of mitigating some of the volatility (currently 46 years old).

Thanks,

Dave

Dave,

I'm glad you're digging into this pair of numbers because they're some of the most consequential inputs.

The "canned" investing styles are meant to be used as example inputs and I strongly suggest that folks should do their own due diligence to figure out appropriate numbers that are based on their own circumstances.

There are many approaches to figuring this out for folks going the DIY route. One in particular that I like to suggest is something called Simba's Backtesting Spreadsheet from the bogleheads.org investing site. This spreadsheet lets you enter your portfolio asset allocation and it generates a return/std to match based on historical returns for the portfolio you enter.
https://www.bogleheads.org/wiki/Simba%2 ... preadsheet

Next, back in FRP, you can set the investing style to custom and enter the return/std dev that the spreadsheet generated.

In addition, I suggest folks try out the sensitivity analysis feature in FRP and set Param 1 to Portfolio Return (second to last choice in dropdown) and Param 2 to Portfolio Std Dev (last choice in drop down). Then set up a good range of values for these and hit run sensitivity analysis to see a visualization of how your plan's rate of success depends on these inputs.