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Spreadsheet formulas for personal finance

bou.ke

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Re: Spreadsheet formulas for personal finance

#61

Post by medvezhenok »

CaptainNegative wrote: post #56
marianov wrote: post #51

High inflation question: Given 40% inflation. An item is offered for $1200 in 12 "zero interest" payments of $100 or $800 in cash. How do you compare their real cost taking into account inflation?

If (annual) inflation is 40%, then the annual discount factor is 1.40 and the monthly one is c = 1.40^(1/12) ≈ 1.0284. Assuming the $100 payments are paid at the end of each month, the value of the money sent over in today's dollars is $((100/c^1) + (100/c^2) + (100/c^3) + ... + (100/c^12)) which is a geometric series with ratio 1/c, so the sum is (100/c^1 - 100/c^(12+1))/(1-1/c) ≈ $1005. So take the cash offer. For…

That's computing based on purely the discounted value of money. The more useful metric is not the % of inflation, but rather the % you can get on your money lying around (your answer assumes that to be 40% annually as well - i.e. a real rate of zero, but real rates on all of your options could be deeply negative as well).

(though from an academic point of view you are completely correct)

Re: Spreadsheet formulas for personal finance

#62

Post by qixv »

divbzero wrote: post #59

> An controversial book on investing I recently read is Lifecycle Investing which argues that young people are often much too conservative in their investment strategy, because they should model their future earnings as a bond and allocate enough to equities to compensate for holding this bond, even leveraging up to 100% to get the right allocation. That’s a pretty interesting idea. I wouldn’t take the future earning…

This is not controversial, at least not in Denmark. All big pension providers invests your money in this way (unless you explicitly drop out).

I’m an actuary and reasearcher, and the theory is well explained in the academic literature. And you are of course right with respect to the volatility of your future earnings.

Re: Spreadsheet formulas for personal finance

#63

Post by thebean11 »

qixv wrote: post #62
divbzero wrote: post #59

> An controversial book on investing I recently read is Lifecycle Investing which argues that young people are often much too conservative in their investment strategy, because they should model their future earnings as a bond and allocate enough to equities to compensate for holding this bond, even leveraging up to 100% to get the right allocation. That’s a pretty interesting idea. I wouldn’t take the future earning…

This is not controversial, at least not in Denmark. All big pension providers invests your money in this way (unless you explicitly drop out). I’m an actuary and reasearcher, and the theory is well explained in the academic literature. And you are of course right with respect to the volatility of your future earnings.

If you were guaranteed some perpetual income if you were unable to work for any reason (including getting fired and just not being able to find a job) I think it'd be a great model. In the US I think the model is too risky given the huge salaries and our collective precarity.

Re: Spreadsheet formulas for personal finance

#64

Post by ptrklly »

wintermutestwin wrote: post #49
usrme wrote: post #16

These are awesome and exactly the kind of formulas I wish I would have been taught earlier on my life! I've personally been using a free spreadsheet-based tool called the Investment Portfolio Tracker by The Measure of a Plan ( https://themeasureofaplan.com/investment-portfolio-tracker/ ) and it's been absolutely wonderful; it never ceases to amaze me how much power spreadsheets have. The author has other tools as wel…

This looks so awesome, but there is no way that I am putting this kind of personal data into the cloud (and am particularly not wanting to feed Google's stalker AI). From the FAQ, when asked if there was an Excel version: ------------------- Unfortunately not. For those keeping score at home, you’ll know that I have a preference for excel over Google Sheets. However, I haven’t been able to find a reliable way of gett…

I think CapIQ is most common, but don't think they do individual subscriptions.

Re: Spreadsheet formulas for personal finance

#65

Post by drited »

divbzero wrote: post #59

> An controversial book on investing I recently read is Lifecycle Investing which argues that young people are often much too conservative in their investment strategy, because they should model their future earnings as a bond and allocate enough to equities to compensate for holding this bond, even leveraging up to 100% to get the right allocation. That’s a pretty interesting idea. I wouldn’t take the future earning…

How long would you expect someone in a high volatility profession to be out of work for? The logic would really only be flawed if someone became long term unemployed or didn't have enough cash reserve to cover a few months of temporary unemployment and hence was risking selling equities from savings at a time of unemployment (which could well correlate with low equity valuations)

Re: Spreadsheet formulas for personal finance

#66

Post by tkojames »

thebean11 wrote: post #63
qixv wrote: post #62

Earlier quoted context omitted.

This is not controversial, at least not in Denmark. All big pension providers invests your money in this way (unless you explicitly drop out). I’m an actuary and reasearcher, and the theory is well explained in the academic literature. And you are of course right with respect to the volatility of your future earnings.

If you were guaranteed some perpetual income if you were unable to work for any reason (including getting fired and just not being able to find a job) I think it'd be a great model. In the US I think the model is too risky given the huge salaries and our collective precarity.

Depends though. For example if you are say 30. Own a house with decent mortgage cheaper than rent. If you have let's say more invested than your total debt including mortgage not counting hopefully equity in the house. Plus 2-4 years invested in taxable account. Why not go 100 stock in retirement accounts.

Working in tech you can bank alot of money quickly. If you keep your lifestyle low. Then if something happens and everything blows up. If you have enough saved you can get by. Plus alot benefits in the united states are based on income not assets.

I have thought a lot about this. I have been extremely lucky to fall into a decent tech job that is way better than working for my local university a few years ago.

Our current spending for a year with so and I is around 60k a year.

The 4 percent rule says that is about 1.5 million or so. Not there yet plus I like working so far.

But if I have say 500k saved and something happens. I can withdraw around 20k a year. But if let's both of us got minimum wage jobs. So 30 an hour total we can cover that gap.

Re: Spreadsheet formulas for personal finance

#67

Post by drited »

wintermutestwin wrote: post #49
usrme wrote: post #16

These are awesome and exactly the kind of formulas I wish I would have been taught earlier on my life! I've personally been using a free spreadsheet-based tool called the Investment Portfolio Tracker by The Measure of a Plan ( https://themeasureofaplan.com/investment-portfolio-tracker/ ) and it's been absolutely wonderful; it never ceases to amaze me how much power spreadsheets have. The author has other tools as wel…

This looks so awesome, but there is no way that I am putting this kind of personal data into the cloud (and am particularly not wanting to feed Google's stalker AI). From the FAQ, when asked if there was an Excel version: ------------------- Unfortunately not. For those keeping score at home, you’ll know that I have a preference for excel over Google Sheets. However, I haven’t been able to find a reliable way of gett…

The Datastream excel plugin from Refinitiv is one paid option used by professionals.

Or if it is just for personal use you could probably scrape yahoo's historical data tables (check their terms of use etc first of course)

Re: Spreadsheet formulas for personal finance

#68

Post by scubakid »

Wow this is like a flashback to my own experiments in Excel, prior to going full mad-scientist for the past 6 months and creating a web app for FI/FIRE planning called ProjectiFi:

https://projectifi.io/

I had been using similar functions in parts of my spreadsheet, but as I kept adding more and more nuance and flexibility to the life planning and projection aspects, eventually the formulas just reached such a critical mass that the whole spreadsheet got really painful to maintain. If you feel like kicking the tires on ProjectiFi, I'd be curious to hear your thoughts -- I've been working hard to make everything that had become unwieldy and difficult in Excel for FI planning and experimentation feel more intuitive and straightforward.

Re: Spreadsheet formulas for personal finance

#69

Post by enchiridion »

scubakid wrote: post #68

Wow this is like a flashback to my own experiments in Excel, prior to going full mad-scientist for the past 6 months and creating a web app for FI/FIRE planning called ProjectiFi: https://projectifi.io/ I had been using similar functions in parts of my spreadsheet, but as I kept adding more and more nuance and flexibility to the life planning and projection aspects, eventually the formulas just reached such a critica…

Cool site! If you'd like a bit constructive feedback, the autofolding menus were a bit slow to open and anxiety inducing.

Re: Spreadsheet formulas for personal finance

#70

Post by repiret »

basseq wrote: post #10

I like XIRR to get an actual sense of what my annualized portfolio performance looks like. Pretty much every bank, brokerage, or financial software I've used is "dumb" and will a) count deposits as growth , b) show total lifetime growth, and/or c) ignore deposits. XIRR allows me to better benchmark portfolio performance by accounting for when I deposit (or withdraw) money so I can clearly say, "I'm earning X% per yea…

FWIW, my brokerage (Raymond James) does this right.
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