negative returns on regular asset borrowing.
I have been experimenting with using loans to tide me over until a future date at which I would purchace an anuity. This seemed to make sense to me since the payout ratio of the anuity goes up as my life expectancy goes down while the earnings in my Ira pretty much compensate for the interest expenses. This can lead to some fairly extreme indebtedness.
I tried it and it seemed to produce a higher living standard and I was happy with the result until I looked at the regular asset income.
I was expecting to see large negative numbers in the years that I was most borrowed. however I could never find any large negative income here and the small negative incomes I did find did not correlate with negative balances in my regular assets.
I hope I am missing something.
Cheers
John
RSS
Hi Amelia, Did you enter borrowing as a one time special receipt and the repayments as special expenditures or did you enter a non-zero value for maximum indebtedness?
Your regular asset income won't be negative unless your regular assets themselves go negative. This won't happen unless you tell the program your maximum indebtedness exceeds zero. Even doing so may not lead to negative regular assets unless you really are borrowing constrained. Best call me at 617 834-2148 so I can figure out what you are looking at. Also, please run the latest update to make sure all results are current.
best, Larry