kablamo / networthify Goto Github PK

It looks like the live version of your site is down. I'm not sure if you still maintain it, however, we love your site. I'm just pointing this out in case you're unaware.

Just a heads up in case you didn't already know, the SSL certificate on https://networthify.com expired on February 18th, 2017.

Thank you, by the way, for the early retirement calculator portion. It's been the tool I come back to again and again for my projections.

1. Your tables assume a mid-year return of half the annual return rate for new savings, but your primary calculation does not. This makes your table and plot inconsistent.

Here is an example where the obvious answer (using your table's calculations) is 15 years, but the main calculation claims 15.2 years.

Note that the desired target net worth

>>> expenses = 50000
>>> annual_withdrawal = 0.04
>>> expenses / annual_withdrawal
1250000.0

is exactly reached at 15 years in your table (ignoring rounding issues in your javascript code). That is, $1.25MM is the resulting value at t = 15:

>>> income = 100000
>>> savings = 50000
>>> expenses = income - savings
>>> portfolio = 69313.90
>>> return_rate = 0.05
>>> withdrawal_rate = 0.04
>>> 
>>> t = 15
>>> savings * (1 + return_rate / 2) * ((1 + return_rate) ** t - 1) / return_rate + portfolio * (1 + return_rate) ** t
1250000.0038315544

2. As an aside, the effective intrayear increase on continuously DCA'd investments with exponential growth is actually r/ln(1+r), but I accept that r/2 is probably "close enough" here, especially considering the site is intended for rough calculation anyway.

>>> r = 0.05
>>> r / log(1 + r)
1.0247967157143927
>>> r = 0.07
>>> r / log(1 + r)
1.0346053546590026
>>> r = 0.10
>>> r / log(1 + r)
1.0492058687257062

3. This is a bit minor, but the calculator rounds the savings rate to the nearest 2% (seemingly to align with the plot) and then proceeds using the rounded rate rather than the values input by the user.

E.g. the savings rate is clearly incorrect (on the left) unless manually input (on the right)

and thus the result is slightly incorrect by default. You can verify the result on the right is more correct via your straightforward annuity calculation (again, temporarily ignoring the fact that this calculation is slightly incorrect for the use case)

>>> from math import log
>>> 
>>> income = 100000
>>> savings = 71000
>>> expenses = income - savings
>>> portfolio = 600000
>>> return_rate = 0.05
>>> withdrawal_rate = 0.04
>>> 
>>> log((savings * withdrawal_rate + return_rate * expenses) / (portfolio * return_rate * withdrawal_rate + savings * withdrawal_rate)) / log(1 + return_rate)
1.2306177277526853