Author Topic: 4% Rule Calculator/Visualization - New Interactive Web Tool  (Read 1364 times)

CCCA

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Hi all,


I thought I'd post another of my interactive tools for feedback from the fine forum folks here. 
It is an interactive calculator that focuses on visualizing how the 4% rule works


It lets you look at individual historical cycles as well as all cycles aggregated into percentages.  It is a bit of a mashup of the Rich, Broke and Dead calculator and the fire calculator that I made.


Anyway, it's meant to be an educational tool to help newbies better understand the mechanics of the 4% rule/Trinity Study and how one can define a safe withdrawal rate. 


If you click on the years in the Legend you'll see the performance related to individual historical cycles highlighted in the graph.


Please let me know if you have any comments or suggestions for improving the content or presentation in the calculator.  It's still a work in progress but I thought I'd share an early version with the folks here on the forum.  I've got some other ideas for upgrades or additional capabilities but they will probably be implemented a bit down the road.


thanks!







simonsez

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #1 on: June 04, 2019, 12:33:55 PM »
Awesome as always, thanks CCCA!

FIREstache

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #2 on: June 04, 2019, 08:16:48 PM »

Nice.  Thanks for your efforts and sharing.

NorCal

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #3 on: June 04, 2019, 08:34:44 PM »
Very cool!  I like the visualization and the variables.

What are your thoughts on adding some type of valuation adjustment?  I've never been comfortable with the idea that future returns are a random walk from today's prices.  The market just doesn't seem to work that way.  You can always expect a mean-reversion for markets at the extremes of high or low valuations. 

I'm wondering if you could categorize valuations by P/E ratios, dividend yields, or some other measure within quintiles, and filter the displayed cylcles by current valuations.  This would certainly narrow the range of outcomes on the far right.

Of course, what I'm describing is something I've always wanted to build, but never had the time or motivation.  Congrats on taking the effort to build a really cool model!

Xlar

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #4 on: June 05, 2019, 09:14:09 AM »
This is a great Visualization tool. Seeing the percentiles next to the graph is really helpful! Would it be possible to add the Mean as well as the Median to that bar graph?

Thank you for putting this together!

CCCA

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #5 on: June 05, 2019, 12:16:09 PM »
Hi all,


Thanks for the positive feedback.  Some things are obviously easier to implement than others. 


Regarding looking at subsets of historical cycles by valuation or other metrics, I wonder how it would work across a 30+ year retirement cycle.  Would an average P/E over the entire period be a useful way to think about it?  I can certainly report valuations as I've seen the data.


Adding mean to the graph is straightforward and I can do that.


Keep the suggestions coming!


thanks

NorCal

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #6 on: June 07, 2019, 06:44:15 AM »
Hi all,


Thanks for the positive feedback.  Some things are obviously easier to implement than others. 


Regarding looking at subsets of historical cycles by valuation or other metrics, I wonder how it would work across a 30+ year retirement cycle.  Would an average P/E over the entire period be a useful way to think about it?  I can certainly report valuations as I've seen the data.


Adding mean to the graph is straightforward and I can do that.


Keep the suggestions coming!


thanks

Yea, given the history of the market, it's tricky to find a good metric that applies across all history.  Price to book and dividend metrics probably wouldn't be useful, as the nature of how companies deploy capital and monetize assets has materially shifted over time.

I think a Price to Sales or Price to Earnings would be the best bet over long periods of time.

Obviously, this would be one of the trickier things to do, hence why I haven't done it yet.

RWD

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #7 on: June 07, 2019, 07:53:27 AM »
Nice work! The percentile shading is really cool!

Abe

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #8 on: June 11, 2019, 11:25:09 PM »
Very nice, I find the histograms very informative. Is there a way to make the distribution of returns graph show the user-entered allocation rather than just 80/20/0 ? Thanks!

CCCA

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #9 on: June 12, 2019, 12:54:02 AM »
Nice work! The percentile shading is really cool!


thanks!

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Very nice, I find the histograms very informative. Is there a way to make the distribution of returns graph show the user-entered allocation rather than just 80/20/0 ? Thanks!


Thanks for finding a bug.  It was actually showing the right returns but the display wasn't updating the label and always showing 80/20 regardless of the actual allocation.  It should work now.

nereo

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #10 on: June 12, 2019, 08:00:03 AM »
hi @CCCA

Since you asked for suggestions...
one thing that seems lacking from every calculator/simulator I've seen is a good representation of when (historically) the FIRST simulated portfolio would fail (i.e. hit $0), and potentially a graphically representation of subsequent 'failures'.

I think it would be helpful as failure is really driving fear/risk aversion behavior, and it could show how such failures rarely happen in the first two decades and are rare after three decades.  Also (might) highlight how things like SS - even distantly in the figure - could mitigate much of that risk for some.

just an idea i've had kicking around...

fuzzy math

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Re: 4% Rule Calculator/Visualization - New Interactive Web Tool
« Reply #11 on: June 12, 2019, 08:42:44 AM »
Amazing!!! Everything you do is top notch and I've spent hours messing around with charts on your site.

Is there a way when you unselect all cycles under display, to then be able to add in multiple years instead of just viewing one individually when you click on the year?