Using Quicken Portfolio Analyzer

macjack39

Is there any documentation that explains how Quicken calculates "expected return" and "expected risk"?

Sherlock

If you haven't already, you may want to review: https://help.quicken.com/display/WIN/Analyze+my+portfolio

macjack39

I have reviewed the above and understand how the expected risk (st. dev. ) is calculated, I assume using a formula that takes into account the covariance between the assets in the portfolio. That brings us to the expected return. Again, I assume the expected return for the portfolio is calculated as the weighted expected return of the individual assets, the weights determined by the proportion of the portfolio taken by each asset. If so, then how are the expected returns of each asset determined? Again, is there a source that gives more detailed information on how these statistics are calculated. I am a statistician by training so am curious as to how this is being done.

Jim_Harman

There is no published information on how Quicken determines the expected returns for each asset class, or whether or how often they are updated.

See this discussion for more information
https://community.quicken.com/discussion/7876925/target-expected-rate-of-returns 

macjack39

In the discussion it states, "this is calculated by Quicken and AFAIK". What is AFAIK?

q_lurker

AFAIK = As far as I know

macjack39

In the discussion it was indicated that, "A variety of good calculators are available online, or you can study the asset mix of your favorite target date fund to see what the experts currently recommend." I assume that there are calculators other than Quicken for determining both expected return and risk. What would be a good reference to use for locating such calculators.

Jim_Harman

macjack39 said:

In the discussion it was indicated that, "A variety of good calculators are available online, or you can study the asset mix of your favorite target date fund to see what the experts currently recommend." I assume that there are calculators other than Quicken for determining both expected return and risk. What would be a good reference to use for locating such calculators.

You might start here
https://www.bogleheads.org/wiki/Tools_and_calculators

The Bogleheads website is run by a volunteer advocates of Jack Bogle, founder of Vanguard.

jfclague

[Removed - Solicitation]

Jim_Harman

Note that the "free" tools are capturing your personal information. Caveat emptor.

macjack39

The Bogleheads website is a great source of information. Thanks for making me aware of it. John Bogle is one of my heroes. I read a lot of his stuff before I got into investing back in the 90s.

Chris_QPW

Jim_Harman said:

macjack39 said:

In the discussion it was indicated that, "A variety of good calculators are available online, or you can study the asset mix of your favorite target date fund to see what the experts currently recommend." I assume that there are calculators other than Quicken for determining both expected return and risk. What would be a good reference to use for locating such calculators.

You might start here
https://www.bogleheads.org/wiki/Tools_and_calculators

The Bogleheads website is run by a volunteer advocates of Jack Bogle, founder of Vanguard.

Guess what?

I looked at the RMD calculator recommended in the Bogleheads tools link and it has 70 1/2 as the starting year.  So, it is just as out of date as Quicken's Lifetime Planner.

But then I lookup RMD calculators and found one that had been updated at AARP and they changed theirs so that you just put in the date that your RMD starts, and it calculates if from there.  The reason they did that is they point out that the CARES acted didn't change the date for everyone.  If you were born before 7/1/1949 you have to still use 70 1/2.

That means, just changing the date to 72 in the Lifetime Planner is the right fix for it not taking the CARES act into account.