When evaluating investment choices, you should always ask three fundamental questions: what are the risks, what are the anticipated rewards, and what are the alternatives?

   How much better off can you reasonably expect to be by investing in stocks than by keeping all of your money safe? Do you think it will enable you to retire earlier? How much sooner? Do you expect that it will afford you a richer retirement lifestyle? How much richer? What's the basis of your expectations?

   How much risk are you willing to take in exchange for the anticipated reward?

   TIP$TER is a powerful spreadsheet, retirement calculator and Monte Carlo simulator built to tackle these fundamental questions. TIP$TER simulates the growth of your retirement savings and the range of retirement budgets that a diversified (yet still risky), part-stock portfolio would support. TIP$TER then extracts the 95, 50, and 5 percentile outcomes from the simulation and compares them to the retirement budget that an alternative, much safer portfolio - fully invested in Treasury Inflation Protected Securities ("TIPS") - would provide.

   TIP$TER provides several practical insights for evaluating investment choices. TIP$TER projects the probability that, and degree by which, you are likely to be better off with a diversified portfolio compared to a 100%-TIPS portfolio. TIP$TER also projects the size and magnitude of the risk with which you could be worse off. With TIP$TER, you can also test the relative safety of different flexible retirement budget plans on different portfolios, and compare those retirement budget plans with the sustainable retirement budget a 100%-TIPS portfolio would support.

   To make its projections, TIP$TER needs some simple information from you. What are your current retirement savings and what additional retirement contributions do you plan to make? When do you plan to retire, and for how long do you want to make your savings last? How much of your savings would you invest in relatively risk-free assets, and at what expected real rate of return? How much of it would you invest in stocks (and other risky assets), and at what expected extra return? What annual standard deviation of returns do you anticipate for the risky portion of your portfolio?

   The User Manual provides some guidance on specifying TIP$TER's inputs. A major flaw of most Monte Carlo simulators is that they assume that future stock returns will be just as attractive as past returns. By simulating an extraordinarily prosperous and rapidly growing period of history, they promote unreasonable expectations. TIP$TER doesn't assume that future is going to be as good as the past. Rather, TIP$TER lets you predict the long-term performance and volatility of the market, and in a way that teaches you to think about stock market returns in a more fundamental way.

   After you enter your inputs, TIP$TER transforms them into real-life measures of risk and reward. TIP$TER factors actuarial statistics into its calculations. For example, the simulated probability of a portfolio running out of money in say, 40 or 50 years, is weighted by the probability that you or your spouse, if any, would be alive at that time to suffer the shortfall. TIP$TER also calculates a "life-weighted" average retirement expenditure amount from a simulated series of withdrawals, so that early withdrawals are weighted more heavily than withdrawals near the end of the simulated time span. And TIP$TER projects not only the level of inflation-adjusted retirement expenditures your current and future anticipated retirement savings would likely support, but also how much you are likely to leave to your heirs.

   TIP$TER also illustrates the benefits of rebalancing your portfolio and the diminishing incremental benefit (with no corresponding decrease in incremental risk) of increasing asset allocations. TIP$TER models your portfolio as being divided and annually rebalanced, in accordance with an asset allocation you specify, between TIPS (or other relatively risk-free assets) and stocks (or other risky assets). TIP$TER can also simulate 10 different regularly rebalanced portfolios, ranging from 10% to 100% asset allocations, and project the results on a common chart. This helps you evaluate the relative risks and rewards of a diversified portfolio as a function of asset allocation, and in so doing, informs your asset allocation choices.

   TIP$TER also lets you tweak its Monte Carlo simulator in creative ways. When simulating your diversified portfolio, TIP$TER assumes that the stock portion of the portfolio has log-normally distributed returns. You can make TIP$TER incorporate "mean-reverting" behavior into the model in order to produce more realistic long-term outcomes. You can also make TIP$TER model a tactical asset allocation strategy that increases the stock allocation after a simulated bear market and decreases the stock allocation after a simulated bull market.

   For more information about TIP$TER's features, view the Tutorials and/or read the User Manual.