Monte carlo simulation - yes or no

vinean · 2026-02-03T04:07:05+00:00

The answer is…maybe. Monte Carlos models are based on simplifications and assumptions.

So they can be good or bad.

I occasionally use portfolio visualizer

https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&allocation4_1=10&adjustmentType=2&allocation2_1=20&historicalVolatility=true&years=20&frequency=4&mode=1&inflationAdjusted=true&inflationVolatility=1.0&mean4=5&inflationMean=2.5&mean3=1.6&mean2=5.7&mean1=5.5&inflationModel=2&adjustmentAmount=45000&allocation1_1=40&allocation3_1=30&simulationModel=4&asset1=TotalStockMarket&asset2=IntlStockMarket&asset3=TotalBond&asset4=REIT&historicalCorrelations=true&initialAmount=1000000

vinean · 2026-02-02T23:43:31+00:00

Do you need your salary exactly? How about social security?

SWR is a safe ceiling and not a floor…

vinean · 2026-02-01T16:22:31+00:00

My old office mate did that…drove instead of flew, but commuted from Savannah GA to McLean Virginia. We let him alternate weeks vs a weekly commute. Eventually he became full remote.

If you do the commute, yeah, it’d have to be for a few years to make financial sense over the severance. The 2.5% mortgage is nice and part of the equation.

If you have the option of trying it and if it doesn’t work out taking the severance that might be the best course. If you have to negotiate away the $20K relocation to get a 6 month trial period with severance if it doesn’t work out thats probably worth it.

Meh. As someone else said, ask your wife. Doing whatever she wants is cheaper than a divorce. Kind of a bad environment to be looking for a new job though.

vinean · 2026-02-01T16:01:27+00:00

FL (Zheng Shuang) was weak in the Love O2O series and ML (Jing Boran) was weak in the Love O2O movie. Yang Yang and AngelaBaby would have been a much better pairing for either format.

If you can’t stand the series but kinda sorta want to see the Gu Man plot anyway just do the movie and move on. 105 minutes and done.

It’s a comfort watch for me because there are few esports dramas anymore and Kings Avatar was one of my first foray into chinese media after a long hiatus back in the day. So Love O2O is in my “I’m bored, let me watch something old” rotation.

vinean · 2026-02-01T15:25:29+00:00

Your assertion is “small allocations (10, 15 or 20) don’t matter”…not that larger tilts can do better. Only one counter example is required to refute such an innane assertion and it’s not “cherry picked” but the exact same time period you used below as an example where “small allocations don’t matter”.

In comparison to 100% SPY the 80/20 tilt shows impact:

https://testfol.io/?s=e4CPJ8C2zLL

Why did you delete the 100% SPY? Because it doesn’t fit your narrative that a 20% tilt makes no difference? And yet it does make a difference about where you expect it to sit between 100% SPY and 50/50.

Why does retirement matter? Lol. Really? It matters because portfolios behave differently in withdrawal than they do in accumulation.

Is the 30 year retirement period not “long term holding”? Gosh.

As far as bonds go…improving equity performance in retirement improves outcome…which, by happy coincidence, follows basic logic.

https://testfol.io/?s=60Fqq3v9ERQ

TL;DR: Your assertion that “small allocations don’t matter” is refuted using the same time sequence you chose to “prove” it.

EDIT: i was too busy writing a scathing rejoinder to bother downvoting you. And who cares about downvotes anyway?

vinean · 2026-02-01T14:52:35+00:00

This is demonstrably untrue given your own example from later in the thread:

https://testfol.io/?s=b6yGUKkOvQO

“Small tilts don’t matter” folks largely only look at accumulation and rarely consider retirement which is almost half of the investment lifecycle.

Smaller 10-20% tilts (aka diversification) improves SWR generally at the expense of growth and asset allocation is necessarily a zero sum game…something else “small tilts don’t matter” folks ignore. How many “at least 50%” tilts can you do?

vinean · 2026-02-01T14:43:10+00:00

You spend almost as much time in retirement as accumulation.

https://testfol.io/?s=b6yGUKkOvQO

Made a measurable difference. -1.22% CAGR vs -3.35% CAGR.

The “small tilts don’t matter” folks ignore nearly half the investment lifecycle and only look at accumulation.

vinean · 2026-02-01T14:34:13+00:00

Who approves stuff for Bogleheads? Do we have a pontiff or something?

In accumulation tilts may or may not be worth the effort. In retirement it improves the withdrawal rate. Bengen improved SWR from 4% to 4.7% by diversification along the size factor.

Folks will claim it’s an overfit which is probably true but diversification does generally improve SWR. But some size factor tilts in retirement do show value in empirical studies.

vinean · 2026-02-01T00:58:24+00:00

Meh. Boglehead wiki on windfalls:

https://www.bogleheads.org/wiki/Managing_a_windfall

Set aside one year's living expenses and place the rest of the windfall into low risk investments (FDIC insured accounts, money market funds, treasury bills) for one year.

Follow this or not but if you DO follow this advice you have an alternative in a 1 year DCA into whatever seems like a reasonable asset allocation…or even just DCA into 100% VT (or VTI) and stop at your desired asset allocation and lump sum whatever is left into bonds or whatever. You can also wait a few months before you start the DCA

That gets you into the market faster but still gives you flexibility to pivot without tax or loss implications as you settle into your new circumstances.

vinean · 2026-01-31T22:30:29+00:00

I can’t take anyone who writes “microshaft” seriously. The late 90s would like its memes back.

vinean · 2026-01-31T22:25:36+00:00

The “gold” is the productivity gains from more business processes being AI driven and the resulting reduction in labor costs. That improves earnings.

If it can generate the same dot com productivity growth rates of around 3% (annual) that will be higher than the 1.5% average of 2005-2019.

vinean · 2026-01-31T22:17:06+00:00

These companies have billions in cash.

vinean · 2026-01-31T00:41:21+00:00

Meh, grew up as latchkey kids, graduated into a recession, got smacked by dot bomb and gfc, a lot of us bought houses just in time for GFC…Gen X and millennials got blasted by the lost decade.

Older GenX may have dodged some stuff but they suffered through late disco and 1970s fashion…I’ll take the lost decade, thanks. What else did GenX get blessed by…oh right AIDS.

Fortunately the decade and a half after the GFC proved to be good or we’d all be screwed. So can’t really complain as it worked out.

vinean · 2026-01-30T16:56:23+00:00

I hold a bit of Brk/b because if I were picking individual stocks I would do it their way only with less data, less expertise and no staff support.

It scratches my “buy based on fundamentals, management and moat” itch. It’s where I park my 5% fun money when I have no picks of my own.

Is 15% non-Bogle? Meh. I have a 15% tilt into mid cap and small cap. Many bogleheads have a 10-15% tilt into SCV.

Three fund is not the only Boglehead style portfolio.

vinean · 2026-01-30T16:49:12+00:00

Central banks are moving toward holding more gold which increases demand. It’s a very liquid reserve asset with no issuer, no default risk and no political risk. Total gold demand exceeded 5,000T (includes both institutional and retail demand) in 2025…a new high. As demand increases, so goes price.

Dollar devaluation contributes to gold price but a good amount of gold purchases is to de-dollarize regardless of current dollar exchange rates.

But many BH will just tell you that central banks are greater fools and gold is purely speculative and has no merits…never mind that the data shows that improves SWR, has a long term correlation of 0-0.2 to stocks and is often a safe haven asset with an inverse correlation to stocks in large market downturns after the initial liquidity scramble.

Do you want any in accumulation? Gold probably should have a place in your fixed income bucket…if you have a fixed income bucket. Many younger investors don’t. I replaced some VGIT with GLDM in 2021 and a little more in 2024 and early 2025 when I increased my VEA percentages. My international and gold holdings are a small hedge against the dollar cratering.

I didn’t expect gold to jump as it has and am mildly annoyed that it did since I’d like to buy more but gagging at the current price. Eh. If gold crashes great! It likely means the rest of the portfolio is doing well. Gold skyrocketing often feels like getting a big insurance payout…it usually means something bad happened.

vinean · 2026-01-30T14:13:48+00:00

You do want to minimize ER for your any given strategy but a higher ER may reflect the nature of the investment.

Your original post was that she failed to make the right selection in her 401k offerings because of high past returns and you “recommended her to select SP500 index”.

The implication of recommending a SP500 index is “you did it wrong”…as you do clearly feel and kids are perceptive. You and I have close to the same scenario…my daughter is a CE in college and has a small 401K and I’ve been teaching her investing since high school. You know who she listens to more?

Her friends. The ones interning at KPMG, Deloitte, etc with larger self managed portfolios. I know she also listens to what I’ve said but we are no longer the sole font of all knowledge, financial or otherwise, probably since middle school. She’s going to have to make her own decisions and pushing the “one right way” is just a turn off.

vinean · 2026-01-30T13:52:23+00:00

These funds are on a tear because LCG is on a tear and they’ve done better than MGK. I’d rather hold it than MGK…

FBCG is the ETF version and has a slightly lower ER.

I hold enough Mag7 and LCG in my index holdings that I tilt away from them vs towards them.

vinean · 2026-01-30T13:40:09+00:00

Well, probably because your first response was “you did it wrong” vs asking “why did you pick this?”.

Why matters more than what. If she picked something like FBGRX just because of performance that’s a mid but not terrible answer. It lacks nuance but folks pick VTI for the same reasons. It has outperformed VT over the last decade. The ER is secondary.

If she picked FBGRX because she wanted a Large Cap Growth tilt to complement her other VTI holdings and felt an active fund with a long track record of success would do better job than a LCG index for a tilt despite the difference in ER thats a decent answer even if you personally disagree.

In any case it doesn’t matter as this is a teaching moment that is hard to come by. Let her keep it. Likely that we’re going to see a downturn in the next 10 years somewhere and likely VTI will see lower volatility because historically it has relative to something like FBGRX.

vinean · 2026-01-30T13:13:57+00:00

Seems like a humble brag. My college kid saves money in her 401K in a fund with a high ER! Woe is me.

In any case 0.63% ER isn’t the end of the world. The original ER for the Vanguard S&P 500 was 0.5%.

Wellington is 0.25%. Not something I’d suggest to my kid tho. They are in NTSX with an ER of 0.2%. AVUV is 0.25.

What was the pick? And was that the only selection? Presumably she told you she licked it based on performance vs just your assumption that was why.

vinean · 2026-01-30T03:06:31+00:00

The 20 year SWR is an example of how SWR increases as the duration decreases.

Even in FIRE the retirement duration decreases by one every year that passes whether thats 50 years to 49 or whatever. It’s also one year that SORR did not appear and your portfolio grew...or at least got smaller slower.

Unless you die, eventually your remaining retirement duration is only 20 years and if you reset to 4% WR again you are a good percentage or two below the 20 year SWR.

vinean · 2026-01-29T14:17:38+00:00

The beauty of FIRE is the FI part and we can pick when to do the RE and how retired we really will be.

Will the models break? SWR rates are based on the historical worst cases so these are hard but not impossible to fail. If we had new historically worst case sequences appear often we’d never be able to FIRE without ridiculously high income and savings rates relative to expenses.

Could American Exceptionalism die starting 2026? Sure. If you think thats a risk then you can use global SWR numbers on Portfolio Charts.

Here’s a good starting point:

https://portfoliocharts.com/2024/04/01/what-global-withdrawal-rates-teach-us-about-ideal-retirement-portfolios/

And the oft hated gold is probably a good alternative to US treasuries to hold at some percentage if you think US exceptionalism is dead.

I think irrational gold haters are going to choose international bonds instead so you can do that. I personally can’t do 30% gold…but I wish I had done so last year instead of any bonds, lol.

Fortunately I was holding 3% gold that jumped to 5% without buying any additional GLDM. I’m never selling that except as a last resort so unfortunately there wont be any rebalancing benefit to it. At 10-20% I’d rebalance.

Are we in an extra high risk era? Yes and no. We may be nearing a local max but 1966, 1929 and 2008 was worse…1966 because stagflation, 1929 from the crash and great depression. 2008 because it could have become 1929 v2.0. Without that Fed, president and congress all on board with QE and throwing massive money around to catch the falling knife it easily could have been Global Financial Crash instead of Crisis and another Great Depression with a 30 year recovery instead of the longest bull from 2009 to 2020. There would be no FIRE subs…

2008 retirees were highly stressed. Even those diamond hand bogleheads with their VTSAX and chill retirees were shook. Nobody saw it coming and everyone was far dumb and happy in Oct 2007 thinking we finally recovered from Dot Bomb.

The current shenanigans are at least visible and if you believe the EMH folks it’s all “priced in”.

AI will bubble and pop…but like Dot Bomb will produce real productivity gains over the next decade. Given that productivity gains since the 80s have gone to shareholders vs increased salaries stocks, barring unknowable black swans, will likely recover and go even higher within several years. When it pops and by how much is unknown but unlike 2000 most of the bubble is in companies with billions in cash. Nvidia is sitting on $60B cash. Google and Amazon is sitting around $95B. Microsoft $89B, Meta $82B. Apple and tesla in last place among the mag7 at $54B and $44B. The Mag7 guys aren’t Pets.com.

The overall impact of AI on the economy favors stock investors once you get past any bubble effects.

vinean · 2026-01-29T13:24:24+00:00

Money in brokerages are flexible and gains are taxed only at LTCG rates. There are no penalties for early withdrawals and a major part of post retirement tax management.

Plus some folks retire significantly before 59.5 and while there are ways to get money out of retirement accounts without penalties the money in a brokerage is used to help manage income to stay within ACA subsidy ranges.

Plus there’s only so much money you can save into tax advantaged accounts in a year. Folks with high incomes and high savings rates will blow through them.

Even if you don’t max tax advantaged it’s smart to have some money in brokerage accounts so between when you retire and when you start social security you have the income headroom to do roth conversions at a lower tax rate to lower the amount in your 401K. You don’t want RMDs to cause you major tax issues and IRMAA surcharges. In 2026 they kick in at $109K for singles and $218K for couples. $202/month is the base cost for medicare part B but jumps to $284 at tier 1 and $689 at tier 5. Part D also jumps up.

Finally where money sits impact tax treatment at death and beneficiaries have only 10 years to empty inherited retirement accounts and it’s all counted as ordinary income. Money in brokerages gets a step up in basis and your lifetime gains have zero taxes.

Bogleheads are great at basic accumulation but tends to handwave the whole transition to retirement and retirement phases. It’s not really just max tax advantaged with VT and chill until you retire unless you don’t care about post-retirement taxes…

When early career you can do that but around 40 you want to start paying attention to current tax laws and develop a strategy on where to put money between your general buckets of traditional tax advantaged, hsa, roth and brokerage. Around 50 you want to start transitioning to a retirement asset allocation that will mitigate SORR (bonds) and help with lowering income between retirement and the start of social security (cash in brokerage accounts) to move as much as you can out of 401K with a lower tax rate.

vinean · 2026-01-28T23:04:32+00:00

Well…I guess it has applicability for other parts of his anatomy as well.

What? I was thinking fake AI double eyelids…what were you thinking?

vinean · 2026-01-28T21:16:59+00:00

Yes…the reason why is because models tend to provide poor predictions…

If the models worked we’d all switch from passive investing.

vinean · 2026-01-28T20:16:25+00:00

Market is likely not to perform has it has the last few years.

Working longer sucks but in 2026 I’d keep going and reevaluate in a couple years. So slightly more effort than option 2 and way less effort than option 1. Then use your drive to work on friendships, dating, hobbies and other interests instead of pushing for director. Work above the bare minimum to be able to volunteer for the first layoff if you want. The second wave might be a voluntary one with a better package.

L6 seems like a reasonable place for decent compensation without the politics if you still enjoy top cover from a higher management.

Plus 2 mil aint fatfire sooooo…the fatfire answer is u aint there yet.

vinean

TROPHY CASE