I have been gaining experience with Pralanna Online. A couple of questions...
1) Standard deviations for asset types.
a) I found it difficult to find modern numbers for the average Real returns for different asset types and more difficult to find the standard deviations. There may be a good reference for that but I could not find it. A number of those references like in the Boglehead Wiki are 15 years old.
b) Second question is when one enters the average return with the REAL check box, that is clear, but on the standard deviation entry it is unclear if those standard deviation numbers are supposed to be REAL or Nominal, it does not say, it would be good if Pralanna had a REAL or Nominal checkbox on that page.
2) Multiple scenarios. With the old Pralanna Gold one could set up 3 scenarios, then create an Export file, then come back in and set up 3 more scenarios and save another Export File. For example:
*Data set 1: Scenario 1, no Roth conversions; Scenario 2, same as Scenario 1 with tax bracket limits on Roth Conv; Scenario 3, same as Scenario 1 but with no tax bracket limits on Roth conversion.
* Data set 2: Same as Data set 1 but retire 2 years earlier.
It is not clear how best to do this with Pralanna Online. Does one create the "Backup file" say for Data set 1, : then do the same for Dataset 2. Then when one wants to look at them Restore Backup file 1, and Restore Backup file 2 etc.?
@bfisher101 Regarding 1a, that was part of our motivation for the default algorithm for determining standard deviation. Regarding 1b, I think that standard deviation settings apply regardless of whether you specify the ROR in terms of real or nominal values. Regarding 2, yes, that's how you'd have to do it with Pralana Online.
Stuart
Regarding item 2 above (backup of multiple data sets), how do you restore from multiple backups when Pralana only shows one filename to restore? I tried changing the backup file name slightly, but Pralana continues to show only the generic filename to restore.
After you select the generic filename, it will come up with a list of files that share the same root name, then you select the file you want to restore.
@bfisher101 Here is one of many sources to find both historical ROR and standard deviations as well as the providers expected ROR and standard deviations. When searching for this data use "Capital Market Outlook" in your search engine and you should get forecasts from a lot of providers. FYI, I do not use the default standard deviation. The example in the manual makes sense, however if your expected returns are much lower than historical average, the standard deviation will also be lower and I do not see that in the historical data. The historical data suggests that the standard deviation is not correlated to the ROR and you will see that on this website. I also looked at historical time periods with very different RORs and the standard deviations were all about the same indicating that you should consider using the same standard deviation for the historical average for that asset class.
https://interactive.researchaffiliates.com/
Thank you Greg, I took a look at the tool. I found it interesting how low the 10 year looking forward returns were compared to the past 5 and 10 year. Like you say I did not see the std dev vary much as a function of the trailing time period lengths.
