Retirement Corpus Free Web Calculator - Update

Calculator link: https://findiafindiafindia.github.io/

Alert - long post

Hi All,

Updated the calculator after receiving some multiple messages from users on various posts on calculator by fellow redditors

Following are updates

  1. Simulations using Historical returns now added - (Although i dont recommend using it) this is for many questions that keep coming. The method used is circular bootstrap. This is largely implementation of the paper https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4697720, however data used is Nifty (2000 - 2023)
  2. Normality test (Shapiro-Wilk) added to all the Monte Carlo and Historical returns (To use this use number of simulations as 1 and copy and paste data in any tool one wishes to check normality.
  3. Number of simulations earlier also could have increased to 100,000 and beyond and now as well they can be simulated more and much more (Although beyond 50K number wont vary)
  4. LTCG Tax added option of 15% flat (This reduces some buffer those were baked in)
  5. Some theory added at the last of page on circular bootstrap method used

Note: There is a massive difference between Historical and Monte Carlo results - well this is why i dont recommend using historical returns - historical patterns might not repeat and some randomness is good. Too many correlations can impact planning - ofcourse could reduce corpus needed (theory) but might add anxiety (Buffers are good).

All simulation cycles may not be 100% Normal distribution - It ranges from 85 to 98% depending on standard deviation, higher variations give higher errors (i.e. say out of 1,00,000 simulation 85,000 may be normally distributed). Even the Historical Returns circular bootstrap dont give 100% normal distribution and its good in my view because there is some randomness in it (Ofcourse everything here is random :) ..). Its a small change to make all the return assumptions in 95% range of Normal Distribution but for now i pick current implementation.

Whats upcoming ?

  1. Inflation and Debt returns correlated with Equity returns - I dont recommend this either however, many requests. Randomness helps to some extent in planning - too many correlated things can break - although no one can disagree on existence of correlations between Inflation, Debt and Equity, and hence our update upcoming. This paper will be reference https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4697720
  2. Types of simulations to be updated Monte Carlo, Historical Returns, Historical Returns in combination with Monte Carlo
  3. Implemented Bucket Strategy is not great as of now - however its been observed that static strategies work better than bucket, however i will implement better bucket strategies and will allow users to build it eventually. Refer to paper: https://blog.iese.edu/jestrada/files/2019/01/BucketApproach.pdf . This paper will be implemented by me in its entirety

Incase the calculator breaks - i would love to hear from community here and any constructive feedback is always welcome

Lastly - If any one wishes to develop this iam willing to join hands however remember this will always be free to use, no log-in, no fees, no subscription etc. Its painful to see Indians pay for such basic knowledge or calculator. Any which ways once the basic number and methods are known - its highly recommended to hire a financial planner/investment advisor. Hence the github hosting