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Regular Asset Income Formula

Submitted by smkeate on 5 October 2009 - 1:50pm

I just started using the program and I really like it. I still have a lot to learn but I do have a question regarding the initial output. The projected "Regular Asset Income" appears very low relative to the total Regular Assets balance. Therefor the annual rate of return on the assets averages only about 1%. I've created a default portfolio allocation that represents my current mix and is heavily weighted toward equities. I don't understand why "Regular Asset Income" isn't more in the range of 8-9%.

Thanks for trying to help a rookie.

‹ Why Are Regular Assets and Savings Commingled? Real Asset Income ›
Submitted by Dan Royer on 5 October 2009 - 4:06pm.
1

It's the real interest rate times the assets that determines the asset income. If regular asset interest in assumptions is set at 5% and inflation at 3%, the real interest rate is 1.05/1.03 - 1

I don't know if that helps, but perhaps Larry or Dick can explain it better than I can.

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