[jaclaz]

JFYI, maybe it is just me, but in Assets ->House you have:

Effective yearly tax rate

Yearly maintenance costs

Yearly insurance rate

I automatically visualize "rate" as a percentage but I see "costs" as being expressed in actual money, so I inserted (believed to be inserting) 2,000 Euro in maintenance costs which of course ended up being 2,000% of the asset value.

Quickest bankrupt ever!

Maybe Yearly Maintenance Rate would be less prone to possible errors?

[scubakid]

Ah good call. I see how that can be confusing. Hopefully I'll also be able to add in a system where you can toggle some of these inputs between percent and fixed value as well.

[jaclaz]

Another side note.

Still in Assets->House.

Your simulator seems to work "by category", i.e. it takes expenses for the house (taxes, maintenance, insurance) from the value of the asset?

I.e. with constant income fixed 6000 (salary until retirement and same amount as pension, tax exempt, todays money, follow inflation), no living expenses, and only a house with value fixed to 200000 (but adjusted to inflation), 1% tax, 1% maintenance, 1% insurance, the value of the asset decreases.

That should be 6000 income tax exempt, 6000 expenses, same house, everything fixed but adjusted to inflation.

But it is not like you are going to pay taxes, maintenance or insurance with "slices" of your house.

Anyway, with those values I start at 25 Net Worth 200,000 (only the house) and end up at 92 with a house worth 26000 and a lot of cash, 121000.

[scubakid]

Hmmm, if you open up the "House" asset form and look at the "Value Change Over Time" field within the During Ownership section is it definitely set to "Match Inflation"? I just tried to replicate your scenario, and in mine the house maintains the 200k value throughout the simulation.

[jaclaz]

Of course not, it isn't but it seems like it is (to me at least).

In the Wizard:

House 200000 200000 paid off

Acknowledge, etc. Confirm

Create a Plan

etc.

Now I have Other Asset value 200,000, Already Owned, cancels out Rent expenses during ownership, Value is fixed only adjusted for inflation, never sold

etc.

House starts at age 25 200,000, arrives at age 92 at 25,986. 25 first year is 200,000 26 second year is 194,000 27 third year is 188,180

The asset is defined "Fixed value only adjusted for inflation".

Of course if I enter the asset and change from "none" (that is now explained as "Inflation of 3% will decrease asset value over time") to "Match inflation" (that is explained as "Asset value will increase over time matching the inflation rate of 3%" and comes out on the main plan as "Value increases to match inflation" I get the "flat graph" I expected.

The issue is about the wording:

"Fixed value only adjusted for inflation"

vs:

"Value increases to match inflation"

The (fixed) value of an asset cannot "increase to match" (it is fixed) it can only be "adjusted to match".

As I see it the first one is "Fixed not adjusted to anything" and the second is "Fixed but adjusted to match inflation". (and something like these will disambiguate from Appreciate/Depreciate).

BTW the actual Appreciate/Depreciate % needs to be increased/decreased of inflation rate.

As I see it, there should be three possibilities only:

Fixed

Appreciate (and its %)

Depreciate (and its %)

and then a separate checkbox for "Match Inflation".

As an example, if you have Inflation at 3% and select Appreciate 1%, the result is a declining value (as you have no way to Appreciate it 1% AND match inflation, while it is common - at least here - to consider appreciation rate not as absolute but the difference over inflation, it should be specified/explained that there you need to put an absolute rate including inflation).

[stanfordalum]

It's not just you, I made exactly the same mistake