I have not done a tutorial video for the planner. But it's good to know that it will be helpful. I'll make one after we have a few more of the core features done, so the tutorial doesn't become obsolete too soon!Thanks Ben! Have you ever done a podcast or any YouTube videos to walk through TPAW in detail? I've been tinkering with it the past few days, would love to go deeper, and am looking to ramp my learning curveThe "Parameters and Main Results" tab of Karsten's EarlyRetirementNow SWR Toolbox shows SWR results calculated from US historical data. It shows SWRs for different starting CAPE and drawdowns, but it's still assuming fixed withdrawals and pass/fail grading ("failure rates") and has all of the issues associated with that.Thanks Ben.
Have you looked at the EarlyRetirementNow SWR toolbox? I totally get that a binary SWR approach is over-simplistic, but Karsten's done both Monte Carlo and historical analysis to come up with his models. I'm not a math expert and can't get under the hood of his models to evaluate their strengths/weaknesses, but Karsten has skin-in-the-game (uses the models for himself) and everything is open source.
He also has a dynamic withdrawal rate model that uses a modified CAPE ratio approach. I'm pretty convinced that Karsten's approach is sound, I'm just trying to understand the finer points of his model in relation to asset allocation.
Thanks!
The "CAPE-based Rule" tab features a dynamic withdrawal model. It uses amortization based withdrawals (ABW), which is the same general withdrawal method used by TPAW and the lifecycle model of economics. The default parameters of the amortization are different. The default in ERN's spreadsheet uses an amortization rate of 1.75% + 0.5*(1/CAPE). This seems to have been based on simulations that Karsten did for an 80/20 portfolio. (I'm surprised the spreadsheet does not account for asset allocation in this formula.) TPAW follows the lifecycle model of economics and bases the amortization rate explicitly on estimates of the expected return of the portfolio and the desired spending tilt. Several options are available for expected returns, but the default expected return is based on 1/CAPE for stocks and TIPS yields for bonds. TPAW also adjusts the asset allocation over time (i.e. constructs the glidepath) based on the fixed asset allocation result of the lifecycle model.
Statistics: Posted by Ben Mathew — Sat Sep 14, 2024 6:31 pm — Replies 12 — Views 1873