Rates of Return in FRP

[rchow]

Jimr, am I correct in understanding that the annual saving fields (Taxable, Tax Deferred, and Tax Free) is new money that is not at all derived from the income minus expenses that we've inputted into the model. In other words, by putting say $10,000 in the Taxable Annual Savings, the model does not automatically subtract another 10K from the income being modeled. This 10K is net new money outside of the model.

And then my second question is that if there is money left over after entering the income and entering the expenses, this left-over money is added to the taxable portfolio value and its growth rate would be applied based on the global Return - Average and Return - Std Dev fields or the additional details fields for return. The additional details fields always overrides the global Return - Average and Return - Std Dev fields.

Thank you.

[jimr]

Jimr, am I correct in understanding that the annual saving fields (Taxable, Tax Deferred, and Tax Free) is new money that is not at all derived from the income minus expenses that we've inputted into the model. In other words, by putting say $10,000 in the Taxable Annual Savings, the model does not automatically subtract another 10K from the income being modeled. This 10K is net new money outside of the model.

And then my second question is that if there is money left over after entering the income and entering the expenses, this left-over money is added to the taxable portfolio value and its growth rate would be applied based on the global Return - Average and Return - Std Dev fields or the additional details fields for return. The additional details fields always overrides the global Return - Average and Return - Std Dev fields.

Yes. It sounds like in both of theses cases you have a good understanding of how the planner works.

It can be helpful to check your assumptions by looking in the detailed view year-by-year results table after you run the planner. There's a "show more detail" radio button at the top right of the window that adds more columns. Also, if you right-mouse-click on any of the column headers in the table there's an option to "show all columns" which adds even more detail in that table. Finally, you can export the entire table to excel by right-mouse-clicking anywhere in the body of the table.

Jim