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Real Asset Income

Submitted by asoverfield@mac.com on 18 November 2007 - 4:15pm

How is real asset income calculated and what does it mean? It appears to be the sum of dividends, interest and other income. The number displayed is far too big.

Thanks,

Al

‹ Regular Asset Income Formula Undeveloped Property as an Asset? ›
Submitted by Dick Munroe on 19 November 2007 - 7:14am.
1

alkaufman at austin.rr.co wrote:How is real asset income calculated and what does it mean? It appears to be the sum of dividends, interest and other income. The number displayed is far too big.

Thanks,

Al
Al,

Regular asset income is just the real rate of return times the regular assets. This rate of return can be adjusted in the Assumptions->Economic Variables tab. If you have Monte Carlo turned on and haven't change the portfolios, then it's the real rate of return of the default portfolio. In testing 2.10.6 here, I get rational results, e.g., on a $1000000 balance, I get $30000 regular asset income with a 6% nominal rate of return. Regular assets grow if you are saving, so the increase (or decrease if you are dis-saving) is not linear.

There have been occasions when we've seen regular asset values in the trillions of dollars, but they've always been problems in the code. If you have a database that is reliably generating whacko results, email it to eval(unescape('%64%6f%63%75%6d%65%6e%74%2e%77%72%69%74%65%28%27%3c%61%20%68%72%65%66%3d%22%6d%61%69%6c%74%6f%3a%69%6e%66%6f%40%65%73%70%6c%61%6e%6e%65%72%2e%63%6f%6d%22%3e%69%6e%66%6f%40%65%73%70%6c%61%6e%6e%65%72%2e%63%6f%6d%3c%2f%61%3e%27%29%3b')) along with a detailed description of the problem and we'll get on it. Don't forget to tell us which family/profile to use, unless there is only one.

Best,

Dick Munroe

Submitted by nanbo@tnaccess.com on 27 December 2007 - 3:02pm.
2

How is regular asset income/interest expense calculated? I figured it out for the first year (BOY Regular assets * real rate). I can not derive it for subsequent years (my Savings are negative).

Submitted by Dick Munroe on 28 December 2007 - 8:15am.
3

vschoenig at cox.net wrote:How is regular asset income/interest expense calculated? I figured it out for the first year (BOY Regular assets * real rate). I can not derive it for subsequent years (my Savings are negative).
I don't have the code in front of me but my recollection of the timing is that we assume earnings happen, then spending, so to be consistent you would have:

Regular assets next year in real dollars = regular assets this year * (1 + nominal rate of return / 1 + inflation rate) + savings (in real dollars)

I'd have to look at the code to make 100% sure of this, but I'm pretty sure that's what's supposed to happen.

Best,

Dick Munroe

Submitted by EdwinMitchell on 1 September 2009 - 10:30pm.
4

Could you please tell me how real asset income is calculated on the Current Savings tab when Monte Carlo is turned on? I have tried to set up a portfolio for the one stock on my Regular Assets tab under the Monte Carlo folder, but I have not been able to figure out how it influences the calculation of Real Asset Income. I can't seem to get the software to yield correct results.

Thank you,
Ed

Submitted by Dick Munroe on 2 September 2009 - 4:47pm.
5

Same calculation but it will be the expected rate of return from the portfolio you've specified in the implement portfolio tab for your regular assets.

Best,

Dick Munroe

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