cFiresim and other simulators in the UK ??

MetaPhysical

I use a couple of fund projection simulators:
cFIREsim
and
FI Calc

These are very useful for running different models and seeing how your fund could pan out over time.
However, these tools use US dollars.  That said, numbers are numbers right?  If we just assume pounds sterling instead of dollars what difference is there in reality between a US person using those tools and someone in the UK?  Are there important differences we should be aware of?

Shimrod

MetaPhysical said:

I use a couple of fund projection simulators:
cFIREsim
and
FI Calc

These are very useful for running different models and seeing how your fund could pan out over time.
However, these tools use US dollars.  That said, numbers are numbers right?  If we just assume pounds sterling instead of dollars what difference is there in reality between a US person using those tools and someone in the UK?  Are there important differences we should be aware of?

I can't find a reference anywhere, but I'm sure that both tools only use US market data for stocks and bond performance, so the outcomes may not be correct for a diversified (or UK weighted) portfolio.

NoMore

Tax and fees assumptions ? Returns based on largely us equites and gilts perhaps ?

As ever they are only guesses. More educated guesses maybe but still nobody can predict the future. 

MetaPhysical

Thanks for the replies.  However, in using a global tracker fund heavily waited to US stocks then we in UK are pretty much the same as those in the US?
Agreed, no one can predict the future and no one ever knows if there could be a crash - or indeed a bull market - like never before.

Moonwolf

If you are using flexible drawdown or UFPLS then the figures could be quite different as I suspect there is no allowance for the tax free element.

westv

Just pick a withdrawal rate between 3% and 3.5%. 

Pat38493

MetaPhysical said:

I use a couple of fund projection simulators:
cFIREsim
and
FI Calc

These are very useful for running different models and seeing how your fund could pan out over time.
However, these tools use US dollars.  That said, numbers are numbers right?  If we just assume pounds sterling instead of dollars what difference is there in reality between a US person using those tools and someone in the UK?  Are there important differences we should be aware of?

These tools should give you a reasonable idea but they are pretty US centric.  IFAs in the UK have access to tools like Timeline which does something similar but has a much more global dataset.  

Just picking a withdrawal rate 3 to 3.5% as mentioned by westv is again theoretically fine, but in practice for most UK people it's more complicated than that because you have to factor in state pension and possibly DB pensions as well.

Also as others mentioned those tools are basically giving you gross amounts and don't take into account tax planning which can make a difference.

However it should put you in the right ballpark.

Moonwolf

guiide.co.uk uses UK tax rules

gm0

FlexibleRetirementPlanner (download version).  Zero out US tax element which is peripheral to what it does but you don't want it.

And off you go.

A montecarlo sim tool for another slant on sequence of returns projections vs backtesting with cFiresim

Set a range for inflation (standard deviation),  Set a range for returns,  Set a pot, And a target income. 

And a nice heat map plotting success/failure with income, inflation, returns on axes as desired. 

Handy to examine if a plan is ultra safe of safeish within certain conditions - and when the edge is near.

It's is all arithmetic apart from the assumption that these distributions are somewhat "normal".  Which they sort of are.  And sort of are not - c.f fat tails, black swans etc.

Hoenir

MetaPhysical said:

Thanks for the replies.  However, in using a global tracker fund heavily waited to US stocks then we in UK are pretty much the same as those in the US?
Agreed, no one can predict the future and no one ever knows if there could be a crash - or indeed a bull market - like never before.

A US investor and UK investor will experience different outcomes due to currency exchange rates. US investors suffer far less exposure given the home bias of the major global indices. Created of course by US companies. 

OldScientist

MetaPhysical said:

I use a couple of fund projection simulators:
cFIREsim
and
FI Calc

These are very useful for running different models and seeing how your fund could pan out over time.
However, these tools use US dollars.  That said, numbers are numbers right?  If we just assume pounds sterling instead of dollars what difference is there in reality between a US person using those tools and someone in the UK?  Are there important differences we should be aware of?

As others have said, cfiresim uses historical dollar returns from SP500. Much more critically, it uses US inflation which over the course of the last 100 years or so has tended to be somewhat lower than UK inflation. A very approximate correction, would be to add 1 percentage point to the fees (i.e. if using fees of 0.15%, use 1.15% instead).

One free UK based simulator (using historical returns from UK stock market and gilts) can be found at https://www.2020financial.co.uk/pension-drawdown-calculator/