I set up a test profile where I implemented a portfolio that was 100% long-term inflation indexed government bonds. When I look at the Percentile Distribution report and the Trajectories report, I see that the All TIPS column is higher than the Projected column ($63,900 for All TIPS versus $59,615 for Projected). Shouldn't these two columns be the same (or at least very close)?
Rick
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A quick follow-up to my earlier post:
I also see significant variance going from the 5th %tile column to the 95th %tile column in the Percentile Distribution report, and going from the very low to very high columns in the Trajectories report. Also, the Projected column is higher than all five %tile columns for the first 10+ years and higher than the 5th %tile column for all years. Isn't the spread between these columns supposed to be very small for a low volatility portfolio?
Rick
Yeah, it is. But when I run a simple single or married case with $10M in regular assets, all TIPS in the portfolio, against the CE that will be shipped with next release (you don't have it yet) I get identical numbers for the tips and projected distribution standard of living. You may have a bogus database. Open a support ticket and upload the database and we'll take a look.
Best,
Dick Munroe
Are your regular assets also all tips? Or just the hus/wife retirement accounts?
Everything is tips, no retirement accounts. I can try those, but I suspect those will be fine as well.(pause while trying)... So I split the $10M into $5M of regular assets, $5M of retirement accounts, everything invested in TIPS and the numbers come out the same. The only thing that I can think of is that the CE is being told the wrong assets comprising the portfolios which would be a UI or DB problem.
Best,
Dick Munroe
I could not reproduce on a quick try. As Dick suggested, make sure everything looks good in your assets lists in the Monte Carlo. If they are mixed up somehow, let us know. That's doesn't seem likely but I suppose it is possible
FYI,The new update reloads the default assets list we provide with updated values
I cleared out the old portfolio data and re-ran the Monte Carlo again, making sure I implimented an all TIPS portfolio for all years. My Percentile and Trajectory reports now look OK as the 5TH through the 95Th %tile columns show the same amounts across for each year. So I must have entered something incorrectly before.
The All TIPS column (column 1) is still higher than the Projected column (column 2) - $63,900 versus $55,237 for each year. is this OK? For comparison purposes, the 5TH through the 95TH %tile columns for 2009 all show $65,769.
Every profile I've ever run with pure tips shows [basically] identical numbers for the projected and TIPS case. This assumes that all your assets (regular and retirement) are invested solely in TIPS. If you've only got some of your assets invested in TIPS, then no, generally things should be higher than your TIPS numbers.
Best,
Dick Munroe
I'll create a support ticket and upload the file so you can take a look.
I have a similar issue. Was this ever resolved? As part of an experiment to try and understand the Spending Behavior results, I created a profile with an all TIPs portfolio, with Aggressive Spending. The projected trajectory is exactly the same as the all TIPs trajectory, as expected. However, the very high, high, median, low, and very low trajectories are all significantly below the all TIPS and projected trajectory (they are all the same). Why would this be? I've been a user for a long time (2005), and I'm considering completely uninstalling and reinstalling and reentering my data, to assure I'm working with a clean installation and database.
I am having the same problem. Also, when i set spending to cautious or conservative, projected trajectory is significantly less than the All TIPS portfolio. Is this a bug in the program?
Haven't had a chance to look at it.
Best,
Dick Munroe
I am still having issues I do not understand. I have built an "all TIPs" portfolio, and implemented it across all accounts for all years. I have set spending behavior to "Aggressive".
Examining the "Living Standard Trajectories", the All Tips trajectory and the Projected trajectory match exactly, at $38,612.
However, the very low, low, median, high, and very high Living Standard Trajectories do NOT match the Projected Trajectory. They DO match each other exactly, but they vary through time from a high of $35,592 through a low of $35,542.
Why, in this case, would the Projected Trajectory not match identically the Living Standards Trajectories Categorized by Lifetime Living Standard, and why would the Projected Trajectory be ~$3000 greater?
I am using version 12.15.4-5, and Windows XP Professional Version 2002 Service Pack 3.
In order to make sure I don't have a database issue, I completely uninstalled ESP, deleted my database, reinstalled ESP, and recreated my profile from scratch.
Do I misunderstand how the trajectories should work, or do these results seem out-of-whack?
I noticed a new update had been posted, which I installed. I just re-ran this experiment with 12.15.5-1, with the exact same results.
I have become convinced, after examing the output in more detail, that this is a bug in the way the program is handling my wife’s spousal Social Security benefits. I suspect that this income is being counted in the “Projected” trajectories, but is not counted in the Monte Carlo trajectories (the trajectories catagorized by lifetime living standard). This causes the Monte Carlo trajectories to be too low, I believe.
I will file a support ticket.
I’m convinced this is related to my wife’s Social Security income after comparing the “Projected” income trajectory vs the “Categorized” income trajectories. The “Categorized” income trajectories all match each other identically (because this profile is entirely invested in TIPs), but these trajectories are different from the “Projected” trajectory.
The “Projected” income trajectory starts out lower than the “Catagorized” trajectories (which makes sense, because I believe the Regular Assets are being drawn down more quickly in the “Projected” trajectory, due to higher spending). However, the “Projected” income trajectory suddenly becomes significantly higher than the “Categorized” trajectories in the year that my wife is scheduled to begin receiving Social Security benefits. If I change the date she will receive benefits, the sharp change in difference also moves. The difference is less than her scheduled benefits, but I believe that’s probably due to the additional regular asset income that occurs due to the lower overall spending in the “Catagorized” trajectories.
I am having a similar problem with the Living Standard Trajectory reports. I have All Tips (no cash) in Regular Assets and both Retirement Accounts. The Projected Living Standard is slightly lower than the All Tips column. The projections (very low to very high) in each year are the same. But each year is greater than the last. Do I have a flawed database?
Hoping to hear soon on the comment I posted on Feb 21. Thanks.
Although I believe the behavior I reported earlier (in my Dec 29 post) is a bug (and I've filed a ticket), the behavior you describe here may simply be a result of the spending behavior you chose. It sounds like exactly what I would expect from "Cautious" spending, which, I think, is the default. For an all TIPs portfolio, there's no reason to spend cautiously. I, personally, would chose "Aggressive" spending for this portfolio. I think that will make your trajectories match up.