Beginner with Upside Investing & MC


i've just upgraded to ESPPlus. i've spent the last year learning the basic program and now feel confident that i understand the results. i made my first run with plus and i must say that the volume of results is overwhelming. can you recommend two or three results that i should focus on first as i begin to learn how to use this powerful tool?

PS: i did read the manual


Hi carromd,

This is a pretty open question so my comments will be general to start. These all assume you are using "Economics-Based Planning".

First, I use the Excel reports and look at the "Annual" tab for "Consumption" and "Living Standard Per Adult" (LSPA). Ideally, you probably want LSPA to be "high and smooth" meaning it doesn't jump up and down over time. If it does this, you have some constraints (most often in regular assets) and may choose to adjust your profile to compensate and reduce or eliminate those constraints, if possible.

Second, I look at "Regular Assets" as that is where your constraints show up most often. If Regular Assets go to $0 at some point, this will cause a change in your LSPA.

At this point, take a look through "Total Income", "Total Spending", and "Net Worth" tabs to get a feel for how those change over time. You don't have to rush this. By experimenting with changes and looking carefully through the reports you can see their impact. If you want more details in a certain area such as taxes, Social Security, housing, or other then go to those tabs for more details.

It is almost always possible to increase your LSPA by making different profile choices. These can take time to understand including reading forum posts on different topics and experimenting to see what works best for your specific situation. It may be that delaying Social Security start dates (for example) improve your results, but then you may need to make other adjustments to "bridge the income gap" between retirement and your Social Security. I've commented a number of times on this topic along with other posters on different ideas here.

Finally, for Upside Investing and Monte Carlo, personally I recommend not using those features to start. Make sure you are comfortable with the core capabilities first and read up on UI and MC in the forum along with videos, etc. There are a number of posts on these both on how to use them and interpreting the results. When you are ready, then give them a try.

I'd set up a simple MC profile to experiment with. Perhaps something like 1/3 cash, 1/3 large cap stocks, and 1/3 intermediate government bonds. You can pick whatever you like, but keep it simple to start so it's easier to understand. Look through the MC results (or UI) and see if they make sense. Try adjusting the "Spending Behavior" to see the impact. Once you get a feel for this, then try to set up a more specific MC portfolio that matches your situation and see the results. With some experimentation and time, the results should start to be clearer.


Dan Royer's picture

I would focus mainly on the Economics mode, but the MC mode should focus on the distribution of living standard and the trajectory living standard. The user manual does do a pretty good job of explaining those two reports.