+ New Calculation

Computed Historical Data

The FI Calc algorithm uses some values that are derived from Shiller's data set.

Inflation

FI Calc calculates annual inflation from Shiller's January Consumer Price Index (CPI) values. For each simulation year, it compares the CPI at the beginning of the year with the following January's CPI:

inflation=endCpistartCpi−1inflation = \frac{\displaystyle endCpi}{\displaystyle startCpi} - 1

Inflation Example

The CPI for January 1990 is 127.40, and the CPI for January 1991 is 134.60. Placing these numbers into our equation yields:

endCpistartCpi−1=134.60127.40−1=1.0565−1=0.0565\frac{endCpi}{startCpi} - 1 \\[0.8em] = \frac{\displaystyle 134.60}{\displaystyle 127.40} - 1 \\[0.8em] = 1.0565 - 1 \\[0.8em] = 0.0565

Therefore, inflation for 1990 is 5.65%.

Stock Returns

FI Calc uses the historical annual total return for stocks. Total return includes both price changes and dividends.

Bonds

Shiller's data set includes bond returns by month, which FI Calc consumes directly.