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Ask HN: How do you simulate your financial future?

2 points by brap ↗ HN
How do you simulate your financial future?

I’m not talking about budgeting, but rather long term cash flow.

Regular income, expenses, investments…

Sure, you can use a spreadsheet, but if you want to keep things accurate it gets too complicated. For example, you have to take into account income tax, capital gains tax… there’s a regular taxed investment portfolio, there’s 401(k), IRA, RSUs… not to mention if you live in a non-US country, now you have to model pension funds, etc etc…

Is there an easy to use tool that gets the job done? Something that tells me when I can retire? And how certain financial decisions can affect this?

6 comments

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asdefghyk
RE "...if you want to keep things accurate..." always unexpected expenses and taxes. To within 10% is fine for me. I use spreadsheet.
brap
That's true, which is why I usually go with the Rule of 500 (total invested across all assets >= predicted monthly expenses * 500). My rational is a safe withdrawal rate of 3.5%, 25% tax on all withdrawals, and an extra 10% to be on the safe side. This adds up to 500 (12 / 0.035 / 0.75 * 1.1).

It's good enough to ballpark it, but it doesn't take into account how tax changes over the years (more gains and less base cost) and between accounts (some can have pretty complicated tax rules that can affect each other), how some accounts become available only later in life (retirement funds), expenses/incomes that aren't fixed, etc etc.

scubakid
That's why I made this!

https://news.ycombinator.com/item?id=36849502

brap
I created a free trial account to try it out (another commenter suggested it) - it really does seem useful, but it doesn’t have a preset that works in my country.

For example - I have to pay income tax for the granted cost of my RSUs (but not the gains!), but my income tax bracket also depends on my income. Then there’s a pension fund to which I deposit every month, then at a certain age it pays me some factor of the saved money every month for the rest of my life (I also have to pay income tax for that, above some threshold). Then there’s some other instrument called a study fund, which surprisingly you do have (called KH) but I don’t know if I trust how it’s implemented.

I would be happy to be a paying customer and model these things myself in PL but I don’t really know how.

I guess what I’m looking for is not a tool that will solve my problem (my country is not a huge market), but something general and expressive enough that will let me sort of model it myself.