Analysis
1, 2, & 3 Reports The
three Analysis Windows - 1, 2, & 3 - and their associated reports show different
cash flow projections based on twelve enterable and modifiable analysis points
of interest that will affect analyses projections and that will help clarify the
required investing course of action:
Savings
from gross or net entries @ Budget; Income and Expenses; examples (1) income entered
as net after taxes or list gross income @ Income and list taxes @ expenses or
(2) list a single item as income @ Income and then, rather than itemizing expenses,
enter 'Household Expenses' as a total.-
Budget Income and Expense entries are not required.
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Assets only may be entered for analysis.
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When an asset has a user selected income, the income goes to Budget as Savings.
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When an asset is purchased or sold, there is a mouse-click option to have the
buy come from Savings and the Sell to go to Savings.
Asset Growth Rates and associated Income, if any.
Income and Expenses' Inflation Rates; my Social Security has an inflation
adjustment of x% and my telephone bill goes up about Y% per year.
Income Inflation Rates at Analysis 1, 2, & 3 Windows; future purchasing
power of current income.
Total Assets less Liabilities shows Assets minus Asset linked Liabilities
and other Liabilities entered @ the Liabilities tab and Savings that are generated
@ the Budget tab; Income - Expenses = Savings.
Available Income from Assets shows the total of actual income earned in
a year from Total Assets, including Savings assuming the Default Earnings Rate
for Savings is entered @ System Setup.?
Inflation Adjusted Income @ is the actual value of future income due to
inflation.
Income Shortfall represents the current year's Income deficit @ Budget;
Income-Expenses-Prior Savings= Shortfall.
Inflation Adjusted Income Shortfall
represents the Inflation adjusted capital liquidation required to balance current
Budget in each year unless same or prior years' income can be increased to balance
Budget.
Total Assets Less Inflation Adjusted Income Shortfall
shows the balance of Assets after inflation adjusted Shortfall has been deducted. Inflation
Adjusted Assets shows the year's purchasing power of the balance of Savings
and Assets due to Inflation. Exclusions
are user selected entries that have been checked to be excluded from selected
Analysis Windows to view impact on a cash flow and capital accumulation projection;
if I don't buy the car.
'What
if' scenarios may be created in one of two ways: by modifying the initial analysis
entries and assumptions or by duplicating the entire account with a single keystroke
at the Main Window and then by modifying the duplicate to compare analyses; duplicate
illustrating 'what if' all investment assets had an 8% growth rate.
Using
illustrations of different investment portfolios (doable in seconds in Investor's
WorkStation), let the investor choose investment risk based on seeing different
types of investment plans and underlying investment portfolios accompanied with
an explanation of the structure, quality, and behavior of the underlying investments
in each investment portfolio and possible/probable ranges of investment performance
outcomes of each investment portfolio. To
the extent that an analysis and the investments required are not consistent with
the risk profile of the investor, the investor must make a choice: Accept
current and proposed investor capital contributions and accept investments with
greater investment risk with the hope of achieving the original capital accumulation
and income objectives within the investment time horizon. Increase
the investor's current and proposed capital contributions and use investments
that match the investor's original risk tolerances profile to maintain the original
capital accumulation and income objectives within the investment rime horizon. Lower
the original capital accumulation and income stream objectives and use lower risk
investments that match the investor's original risk tolerances profile to achieve
lower capital accumulation and income stream objectives. Increase
the investing time horizon and use investments that match the investor's original
risk tolerances profile.
By
going through this exercise bad investment planning choices that almost always
lead to disappointment are eliminated; investments that will not/cannot achieve
the investment objective or investments that may or may not achieve the investment
objective but are not consistent with the investor's investing comfort zone. Taking
this approach will also insure that the investor clearly understands the investments
he or she has, the real, not perceived, investment risks that are involved, and
the probabilities of achieving capital accumulation and income stream objectives. |