Date: Tue, 20 Feb 2007 08:17:31 -0600
From: "Elle" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Portfolio Optimization Software?
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IMO the assumptions necessary to such an effort will tend to 
involve a high margin of error. E.g. you'll have to choose a 
timeframe for the average return of each category of stocks, 
and then weigh how meaningful this timeframe is. Some of 
these categories also do not even offer much historical 
data, so for them the statistical significance of 
"historical return" and related parameters is going to be 
low. For categories where data is sparse, the caveat "past 
performance is no guarantee of future performance" becomes 
particularly important.

I am sure one can buy such software, but mostly I think it 
will enrich its manufacturers, not you or anyone else. 
They're really selling snake oil, to a large extent, IMO.

I suggest you experiment a bit with the free online asset 
allocating tools linked at 
http://home.earthlink.net/~elle_navorski/id8.html . This 
would be a wise choice IMO in particular because you're 
considering "just" the five Vanguard funds, which seem a 
fine set of choices to me, one which I doubt can really be 
beat except via luck in the future. Note the discrepancies 
from one tool to the next, even when using ostensibly the 
same set of assumptions. To me, these differences do not 
mean one tool is better than the next. Instead, it means 
that the margin of error is somewhat wide when allocating 
one's assets. It's a crap shoot as to how much tweaking will 
yield the optimum portfolio for the future.