I was singing the praises of ESP to a friend recently and he asked a couple of questions I couldn't answer:
1. Can one change the rate of inflation over time...i.e. more than once?
2. Can one change, more than once, one's portfolio rate of return?
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markgoodrich at swbell.ne wrote:I was singing the praises of ESP to a friend recently and he asked a couple of questions I couldn't answer:
1. Can one change the rate of inflation over time...i.e. more than once?
2. Can one change, more than once, one's portfolio rate of return?
Nope, inflation can change only once (well, you can set it to some arbitrary value today, then change it to some other arbitrary value in the future, so I guess the answer is twice). Inflation in the past it arbitrary.
The correct treatment of inflation is to treat it like a monte carlo variable but the computational load that puts on the system is very high. There isn't any particular reason that we couldn't add a way to input an arbitrary number of inflation figures, but where do you stop? Is 5 too many, 10 too few?
With ESPlannerPlus you can have up to 10 portfolios all of which can have varying rates of return. So buy Plus if you want to have that level of control.
Best,
Dick Munroe
Thanks, Dick, I've passed your reply on to my friend.
Your answer raises a question. You say each portfolio can have "varying returns." How does one vary the returns on a given portfolio over time?
Mark: When you look at the Monte Carlo input screen you'll see that each portfolio can take effect in a different year for each of the accounts. So reguluar assets could have a different portfolio in any given year.
Dan
markgoodrich at swbell.ne wrote:Thanks, Dick, I've passed your reply on to my friend.
Your answer raises a question. You say each portfolio can have "varying returns." How does one vary the returns on a given portfolio over time?
What Dan said is correct. I meant to say that you had many portfolios that you could, over time, apply to your accounts, simulating a varying rate of return.
Best,
Dick Munroe