A New Tool for Matching Goals to Timeframes

Chart Talk, Goals, Theory

One of the things I’ve always found interesting about engineering — whether it’s making a new product or creating new spreadsheets — is that it’s a continuous learning process.  One new design may address an old question but raise a new one, and the search for new insights continues.  Sometimes working on a tool requires new methods that are interesting in their own right, and developing them can lead to new ideas you weren’t even looking for.

The Portfolio Finder in particular required quite a bit of work to get it where it is today.  As part of the most recent update that accounted for start-date-independence, I reused the calculations in the Heat Map chart to find all of the 15-year rolling average returns for a given portfolio.


In the process of playing with this data, I realized that slicing the Heat Map like this is actually pretty handy for certain investing questions.  For example, Michael Kitces has pointed out that the worst-case 15-year average return of an asset allocation has important implications for safe withdrawal rates.  Wouldn’t it be nice if we can isolate the rolling 15-year averages for every portfolio?

Well we already have the data, so let’s make a new tool!  It’s called the Rolling Returns calculator.


The Rolling Returns calculator displays every real CAGR of a specified timeframe over each subsequent rolling period since 1972.  The example here shows the exact same data highlighted in the Heat Map above, and changing the timeframe simply moves the slice to a different “Years Held” column.  Looking at the specific returns in this way can help you explore trends a bit deeper than before.

For example, the 15-year rolling returns of the total stock market have been trending dangerously close to the 1% real returns danger zone that Kitces highlights in his article.  It’s no wonder investors are nervous these days.  What would an alternative asset allocation like the Swensen Portfolio look like?


With worst-case 15-year rolling returns above 4%, that extra margin might make many retirees a lot more comfortable.

Of course, the utility of this type of data goes well beyond retirement planning.  I personally find the Rolling Returns calculator most helpful for matching your goals to the appropriate investing timeframe.  For example, if you have a new baby set to start college in 18 years, set the timeframe to 18.  If you know that you won’t hold a portfolio that does poorly for more than 5 years in a row, set the timeframe to 5.  By studying the variety of rolling returns matched to your personal life goals, you’ll gain clarity on how much risk you are truly taking with your portfolio choice.


As I’ve said many times, a single average return never tells the whole story.  Play around with the Rolling Returns calculator by matching the timeframes to your personal needs, and hopefully the big picture will become a little more clear.