Upside Investing

I am not sure I understand how "upside investing" is supposed to work. For example:
1. What is the rate of return on stocks?
2. When I change the amount invested in stocks each year from 0 to 50k the floor value goes DOWN substantially for the first 5 years of the plan, and stays somewhat lower through the life of the plan.
3. In general how does changing the dates for starting, and stopping converting to safe assets impact the floor value?
4. How do I think about comparing the upside investing to the "standard" smoothing plan?

Sorry for all the questions, but as I said in the beginning I don't really understand the concept, or what it is I am hoping to discover through the use of upside investing?


Well I seem to have double posted. I didn't realize that the first draft have gone up. However, questions 2, 3 & 4 are still puzzling me.

dan royer's picture

You could read the section in the user manual, which is linked at the bottom of this site under Help and Support (or here: )

But the key concept here is that the risky assets (which are using the S&P historical returns) are assumed to be ALL LOST. So this will cause your living standard to go down--or think of it as establishing the floor value. Then, the Upside reports show you the probability that you will not lose it all and thus beat the floor value.

The questions are fine.

It's one way to look at things, but I personally don't find it that useful to assume that I lose all those equity assets. Some others do. For me, the economics mode set at a very moderate level say 3%, 5% and 6% shows me the range of reasonable asset allocations.


I am agreement with your comments that it is not too useful to assume all the equity assets are lost. The chances of that happening are extremely remote unless you put all your risky assets with the next Bernie Maddoff, and even that can be avoided by not putting all your eggs in one basket.

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