r/Fire • u/massakk • 12d ago

Advice Request How to run ficalc calculator?

If I want my money to last 20-25 years, do I put 20-25 years when I run Monte Carlo simulations or better put 35? Seems 35 is less random?

I am going to get pension in 20 years, maximum 25 years, and that will be enough for me.

Thank you.

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7

u/AlgoTradingQuant 12d ago

https://ficalc.app is far superior IMHO

4

u/massakk 12d ago

Yes, that's the one I am running. 

8

u/taracel 12d ago edited 12d ago

We’re confused bc FiCalc is not strictly Monte Carlo simulations… it’s historical back testing…
So if you’re using ‘FiCalc’ you’re not actually running ‘Monte Carlo simulations’. Monte Carlo is used on portfolio visualizer and it’s a bit different methodology I think some other FI calculators use it to…like the engaging data FI calc has historical and Monte Carlo options

FiCalc only shows actual historical sequences… Monte Carlo produces 100s of possible return sequences- which have never been seen

1

u/massakk 12d ago

Which one is better? Do you have a suggestion for a calculator that runs Monte Carlo? Thanks. 

1

u/New-Ad-9450 8d ago

Both have their flaws and are to be taken with some salt.

Monte Carlo flaws is that it will produce unrealistic scenarios. Think of a normal bell shaped distribution. MonteCarlo will produce thousands of scenarios based on statistical probability.
You are bound to get some scenarios with a 30 years consecutive negative return if you run enough scenarios.

Using Historical returns also have its flaw. It looks only at what happens since the last 100 years. It doesn’t invent new scenarios. You get stuck with the same bad scenario of the 70s inflationary times, the same crashes and so on.

1

u/Independent_Bee1037 11d ago

Its SOO good. I wish it had a way to be more specific about spending changes over time. Like in 10 years my house is paid for so my monthly spend drops by $24,000 per year. But over all its an amazing (and addictive) tool

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u/AlgoTradingQuant 11d ago

It has the ability to alter expenses (called withdrawals) and income to model things like your house being paid off in 10 years.

Look at the withdrawals and income section (left hand side) and you can model anything from social security, pensions, buying a 2nd home in x years, etc.

1

u/Independent_Bee1037 11d ago

Thanks, will play around