Input the investment variables in the light blue input areas or select the option buttons. Input variables for a saved profile can be reloaded by selecting the profile from the main menu Select Investment Profile drop down list. Use tab to step through the inputs. When you click Analysis the Analysis Table is displayed, then click Build to generate an analysis for the current Input. From the Analysis menu you then can Add investment profiles to the table, compare All saved profiles, Compare saved profiles to the table and Plot selected values. When you Save the current Input is saved using the Description as an identifier. Select Investment Profile from the drop down list to reload saved Input or Delete.
Asset Initial details represent the asset at time of purchase. Input values directly into the light blue input areas.
Input a description for the investment profile. This is used an identifier.
Input the initial purchase amount of the asset. This should reflect the value of the asset at the time of purchase.
Input any expense associated with the purchase. This should include transaction, legal, and financing (excluding interest) costs.
Asset Growth details represent future capital variations. Input values directly into the light blue cells.
Input the average expected annual capital growth percentage of the investment for the duration (number of years) under analysis. This determines the annual amount the investment value will vary. Capital growth has a major impact on an investment due to the effect of compounding. For an investment to perform better than the average it must possess attributes which result in increasing demand relative to alternatives. For real estate research local market conditions including population trends. For equities research the overall market and the specific company performance. Consider the investments uniqueness and desirability. For strong capital growth the asset must possess some unique attributes that are (or will be) in demand. For all investments consider economic cycles. There is a wealth of general and specific data available on the internet including a wide range of growth and performance statistics. However beware statistics are based on past performance, what you are interested in is future performance, make sure you are comfortable with any input you apply.
Input any regular annual additional asset contributions that will be added to this investment. If the investment is property this value will normally be 0. If it is an equity or cash account investment and any additional capital will be invested each year (i.e. buy more shares or add more money to the account) this value will be the amount added each year.
Input any regular annual additional expense associated with the additional capital.
Annual Income represents investment income excluding capital growth. Select the type of income from the investment using the option buttons and input the required values directly into the light blue input areas. When considering income offset expenses should be viewed as income. For example if you are analyzing the investment performance of your home include the rental expense you would incur to rent somewhere else to live if you did not have your home as an income. To do this simply include the value of the offset expense as an income for the investment.
Select the income type as a percentage of the asset value or as a percentage change from a base value. The type of income selected depends on how future income will vary. If it is closely related to the asset value (including capital growth) select % pa of Asset Value, if it is closely related to changes in a base (current) value select % change from Base. For property investments the income type is normally a % change from Base. This is because rental/lease income tends to be related to overall market supply and demand. A property price increase of 20% does not automatically result in an income increase of 20%. This is particularly true for domestic property, commercial property tends to be less volatile. For an equity or cash account investment the income type will normally be % of Asset Value. Equity investments often pay a dividend which remains reasonably constant relative the equity value and income from cash accounts is normally a percentage of the amount invested.
Input the percentage value to apply for your income type. If income type is % of Asset Value the calculated income for each year will be the percentage value multiplied by the asset value for that year, income will change relative to the asset value. If income type is % change from Base the calculated income for each year will be the previous years income plus the percentage change. For a change from Base the percentage value will usually be closely related to the Cost Index %. This indicates changes in the cost of living or inflation rate. First year income is set at the Base Value.
Input first year income to set the Base Value. This only applies when income type is % change from Base.
Annual Expense represents investment expense excluding loan interest. Select the type of expense incurred by the investment using the option buttons and input the required values directly into the light blue input areas.
Select the expense type as a percentage of the asset value or as a percentage change from a base value. The type of expense selected depends on how future expense will vary. If it is closely related to the asset value (including capital growth) select % pa of Asset Value, if it is closely related to changes in a base (current) value select % change from Base. For property investments the expense type is normally a % change from Base. This is because authority and maintenance expenses are usually closely related to the Cost Index %. This indicates changes in the cost of living or inflation rate. For a self managed equity or cash account investment with no expenses set the expense type to % change from Base with the percentage value and Base Value of 0. For a managed equity or cash account investment expense type is usually % of Asset Value with service/management fees applied as a percentage of the asset value.
Input the percentage value to apply for your expense type. If expense type is % of Asset Value the calculated expense for each year will be the percentage value multiplied by the asset value for that year, expense will change relative to the asset value. If expense type is % change from Base the calculated expense for each year will be the previous years expense plus the percentage change. First year expense is set at the Base Value.
Input first year expense to set the Base Value. This only applies when expense type is % change from Base.
Loan Details represent any borrowings undertaken for the initial asset purchase. Input values directly into the light blue cells.
Input the initial loan amount.
Input the average annual interest rate applied to any outstanding loan amount over the life of the loan. Interest expense calculations and outstanding loan amounts are based on calculated monthly interest charges and repayments.
Input the average annual repayments applied to any outstanding loan amount. Interest expense calculations and outstanding loan amounts are based on calculated monthly interest charges and repayments.
Analysis Details represent additional data applied in the analysis calculations. Input values directly into the light blue cells.
Input the number of years for analysis. This duration should be considered when setting input values impacted by the length of analysis. To decrease the impact of investment performance volatility on the results increase analysis a duration. In most cases a minimum duration of 10 years provides a time frame where averages reflect actual performance.
Input a percentage indicating changes in the cost of living or inflation rate. This percentage indicates changes in the value of money or buying power. Inflation rates or Consumer Price Indices can be applied as the Cost Index %. A cost index of 10% basically means that in 1 years time it will cost me $1.10 to purchase what I can purchase today for $1.00. This value is applied extensively to determine current equivalent values for your investment in future years.
Input the percentage taxation rate that applies to the investment. This tax rate is applied to the Surplus in the analysis. If the Surplus is positive it is reduced by the Taxation Rate % to give the Surplus Tax Adjusted, this reduction equates to tax paid on the profit generated. If the Surplus is negative it is increased by the Taxation Rate % to give the Surplus Tax Adjusted, this increase equates to a reduction in tax paid due to the loss incurred. Taxation on capital and depreciation allowances are not considered. While taxation impacts on investment performance, compounding capital growth has a much greater impact. Initially it is usually beneficial to run an analysis with a Taxation Rate % of 0 to determine the taxation independent investment performance.