Story Comments

CandiL.ou

What I recommend is this:

1. Spend "a lot less than you make" and reinvest the surplus in fixed income mostly and some in equities.

2. Because of inflation most people need some equities to get the appreciation element. If on the other hand your fixed income far exceeds your outflow you will not need equities, period!

Of coarse its a model, but its flawed model on MANY LEVELS, SCIENTISM BEING THE MAIN ONE, ASSUMPTIONS PULLED OUT OF THIN AIR FOR ANOTHER. The assumptions ARE NOT CLEAR TO WHOMEVER USES IT BECAUSE, AGAIN THEY DID NOT WRITE THE SOFTWARE! IT IS MOST CERTAINLY NOT CLEAR TO THE "CLIENT". If the bathwater is contaminated you don not put the baby in it in the first place!

rwemick

Finally woke somebody up! Now to the point.

I am very familiar with Monte Carlo simulations since I used it many times in my field of electrical engineering. When used and instituted properly in the PHYSICAL SCIENCES they can be an excellent tool to solve stochastic problems. In fact, Monte Carlo first gained widespread acceptance when it was used in the development of the atomic bomb during WW2.

I used the "moniker" to bring to the front the DANGER OF THE WIDESPREAD USE OF SCIENTISM IN THE FINANCIAL WORLD, IN PARTICULAR.

This term "scientism" was coined by the Austrian economist Friedrik Hayek. In short what it means is the porting of the methods used in the physical sciences to the social sciences such as economics. We all must be aware of this danger since it is very pervasive with THE DEN OF THIEVES.

My savings did not suffer at all, since I invest in Muni bonds to a large degree and spend a lot less than I earn. I also follow th...(Read more of this comment)e investment pyramid; cover your income requirements first, with bonds and other fixed income securities. If anything is leftover THEN YOU PUT IN THE STOCK MARKET, PERIOD!

Inflation in my opinion IS THE MOST DANGEROUS ELEMENT, IT EATS AWAY AT THE VERY CORE OF RETIREMENT.

I am not ditching the system, but you must understand that the system IS CORRUPT, IT ALWAYS HAS BEEN!! The financial system depends of the application of SCIENTISM TO MAKE MONEY.

George Schulson(Show less of this comment)

George,
The Monte Carlo simulation is a recognized statistical tool used throughout the known world. That is has the name of a casino bears no relation to its validity.

You can have a 99.9% probability and still catch that 0.1%. Being that it is generally agreed that this is the worst economic downturn since WWII means that we are in the far left hand tail of the curve. As Candi says, your only alternative is coffee cans in the backyard - but watch out for inflation!!!

Sounds like your saving got his as did mine and 99.9% of everyone else. Rather than ditching the whole system, take it as a lesson learned.

So what do YOU recommend, George? Sticking your cash in mason jars, and burying them in the backyard?

A model is just that...a model. It's based on assumptions, and that fact should be clear to whomever uses the model, or relies on it. The user is usually free to model higher or lower inflation rates, and expected returns. Don't throw the baby out with the bath water.

Anyone who uses a system that has a casino moniker as its foundation needs to get their brain checked!!

The financial planner that has a policy of don't ask don't tell needs to remove themselves from the financial planning business, PERIOD!

The entity that recommended a withdrawal rate of 5 to 10%, is and was clueless. Their model did not save the person from ruin it is what caused it in the first place!

Anyone who uses third party software, has NO ability to defend the product on a forensic basis. They did not write it and have NO IDEA OF THE ASSUMPTIONS THE software is using! By implication they also violate the fiduciary responsibility to the client.

All of these types of software ask for the unknowable. Even if the unknowable were known, even the slightest change in some of the parameters compounded over thirty or forty years would cause drastic changes in the outcome.

The results fail to show if you are in trouble BEFORE HAND, if you ma...(Read more of this comment)de it to the 30th year and failed on the 31, what were the years before that like?

George Schulson(Show less of this comment)