TIP$TER projects the safe, sustainable retirement budget that a tax-deferred portfolio fully invested in Treasury Invested Protected Securities (TIPS) would support.  Then, it projects and compares the volatile range of retirement budgets that a diversified portfolio would support.
The Solution

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Introduction

   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? And what is the probability of doing worse?

     TIP$TER analyzes every financial plan using a risk-free baseline.   TIP$TER projects the sustainable inflation-adjusted retirement budget that a tax-advantaged portfolio fully invested in Treasury Inflation Protected Securities ("TIPS") – plus other anticipated retirement income sources – would support, if was amortized over the plan's targeted duration.  The side-by-side graphs below illustrate an amortized $2M 100%-TIPS portfolio (to the right) and the retirement budget (to the left) that it, plus future Social Security benefits, would sustain:

    Then – using an exploratory simulation of almost 140 years of S&P 500 returns that are scaled to match your predicted values for the annualized equity risk premium – TIP$TER simulates and compares the volatile range of retirement budgets that a traditional financial plan, with a diversified and annually rebalanced portfolio, would likely support.  TIP$TER then extracts the 95, 50, and 5 percentile outcomes from the simulation and compares them, on a common chart, to the retirement budget that an all-TIPS portfolio would provide.

   For more information about TIP$TER's features, select the links to the left.  See also the "TIP$TER User Guide" section.

Next: Constructs a "risk-free" baseline portfolio based on TIPS