The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: trailrated on January 25, 2016, 12:38:49 PM
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I have attended a few Boglehead meetings in the Bay Area and have met some great people doing so. Gordon, a member of the group, has created an Asset Allocation Calculator that he is currently testing before releasing to a larger audience.
I asked for permission to pass the link on to you for some additional feedback. Please pass on any questions or suggestions to make improvements. I do not believe he has an account so my further comments will be on his behalf.
https://www.aacalc.com/ (https://www.aacalc.com/)
Thank you for the help! The following quotes are some of the feedback within the email group already
What makes this calculator different than a lot of the others is it looks at your total assets, including Social Security and pensions. Because these are very bond like (they provide a stable source of income), and because they usually amount to a large portion of the total assets, this means much of the remaining assets can be used to take risk on stocks (provided it is in fitting with your risk tolerance).
Age in bonds is a meme that doesn't have a lot of mathematical backing. In the simulations I have run it consistently performs worse than any other strategy.
The question is Social Security like a bond is a good one. I used to have an asset allocator that treated the two as different beasts and computed the solution using a technique known as stochastic dynamic programming. My new asset allocator treats them as much the same and computes the results using a much faster approach developed by Nobel laureate Robert Merton. That the two approaches give similar results indicates to me it is fine to treat Social Security as like a bond. If you don't you need stochastic dynamic programming or some other way of computing how it influences your asset allocation.
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:)
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Thanks for posting the calculator here. I don't have any feedback at this moment.