Investment Portfolio

An investment portfolio for one or multiple clients is simple to create and the reports can provide up to date or annual totals in a snap.

In this example we will recreate one investment that includes investments and cash withdrawals over time.

Create a new Record with "File" and "New Record". See also Creating the first Record and Data entry screen Basics.

On December 15, a couple invests 50,000. Their goal is to contribute to their retirement plan 1000 twice monthly for the next two years (starting Feb. 1) and to reevaluate in two years their return on investment. To make it slightly more interesting, they will sometimes invest more and also once take out an amount to pay off some debt (they shouldn't have done this but nobody's perfect).

The Data window looks like this for the normal situation. The Annual Nominal Rate is not really pertinent at this point since we don't know what the ROI will be. But just to get an idea, since the couple would like a 12% return, we will put in 12%. 

Press on "Compute" to produce a Results Table over 2 years with a 12% return. Their theoretical balance at 12% would be 118,617 after 2 years.

Time goes by and the couple invests an extra 3500 on August 10, 2007 (first highlighted line in the screen below). So we insert a line by highlighting the line whose Pmt Date is BELOW where we want to insert (thus Pmt Date of 08-15-2007) and press on . A payment may also be added with the right mouse click (Select any line, press on "Insert" and "Payment(s)". A window will appear to add at the specific date and with the various criteria desired - in this case 1 payment of minus 3500).

Planning for an expensive Christmas, the couple must draw 5000 from the account on December 1st 2008 and will not pay the usual 1000 on December 1. Thus change the December 1 payment from -1000 to 0.00 and add a new line with 5000 to represent a withdrawal (second and third highlighted lines below).

These are the only changes made until the maturation date of February 1, 2009.

On the maturation date the value of the investment is really 135,100. What is the true return on investment? This can easily be figured out by selecting all lines (Ctrl-A), right clicking with the mouse and choosing "Interest rates" and "Rates Adjusted for Balance = X".

A window will appear in which to specify the balance of 135,100.

Click on OK and the rate will be recomputed for all selected lines. The final ROI is thus 23.8077% (pretty good investment!). See also Interest rate (equal) recomputed to yield a balance = 0.00 or other amount.

The schedule should be saved in the database and updated as time goes on.

Interest automatically recomputed

Compound interest is charged in between each of the payments/refunds. The interest is automatically calculated every day (as provided by the normal actuarial method) even if the compounding period is not daily.