Scenarios are groups of…
- Rules and
…that you combine to see how a particular investment strategy performs for you based on the assumptions you enter.
So, how do you add a new Scenario? Well, it is super easy.
First, register for a free Real Estate Financial Planner™ software account.
Next, log in to your Real Estate Financial Planner™.
Then, click on the Scenarios page.
Once on the Scenarios page, click on the Add New Scenario button.
Once you’ve created the Scenario, you will be asked to answer a few questions about the new Scenario including what you want to call it as well as a description.
Name Your Scenario
The Scenario Name is what you will use to identify your Scenario from the other ones in your Real Estate Financial Planner™ software account. You might call it: “John and Sue’s Personal Investment Plan” or “Paying Off Houses Early” or “Nomad Every Year For 5 Years” or whatever you’d like to test.
How Long Do You Want To Measure
The Number Of Months is the number of months that you want to run your Scenario for to see how your investments do. If you only want to see the next 10 years, go ahead and put 120 months. If you want to see how your investments perform based on your assumptions over 20 years, go ahead and enter 240. The shorter it is the faster the Scenario will run. See why does it take so long for more information on how long it takes to run Scenarios and why you may want to model shorter durations (at least until you get your Scenario set up correctly).
The system will default to 480 months so use that if you want.
Optional Info To Personalize Charts
The next two groups of inputs are optional. If you want, you can enter in your name and the name of your significant other/spouse. Plus, you can enter in your birthday and their birthday. Some Charts will allow you to select age as a timeline option instead of month or date. To be able to show your age on Charts, you will need to enter your birthday.
Your Effective Income Tax Rate
Enter in your Effective Income Tax Rate. Use the link below the input field if you need help determining what your Effective Income Tax Rate is. This is used to calculate how much tax you’re paying on money earned in a specific Scenario.
The Real Estate Financial Planner™ software will default to 15% so if you don’t know your own Effective Income Tax Rate, go ahead and use the default.
Next, enter in the Inflation Rate for your Scenario. This is used to tell you what a dollar in the future is worth in today’s dollars. Historically, inflation has been about 3% per year, so the Real Estate Financial Planner™ software defaults to that and I’d recommend you use that unless you’re specifically testing something related to inflation.
Describe It and Make Notes
Finally, for your own records, feel free to write out the description of your Scenario in the Scenario Description field. This is your spot to make notes about what you’re testing and why so you can remember when you come back to it later.
If you have a Premium Real Estate Financial Planner™ software account and have Monte Carlo turned on, you will also be asked how many Monte Carlo runs you’d like to do for this Scenario. I recommend keeping this at 1 until you know for certain that you’re wanting to do Monte Carlo.
And, that’s it. Once you’ve added your Scenario you can begin to add your Accounts, Properties, Rules and Goals to model your specific investing strategy and see how it performs.
Are you looking to read more about Scenarios on the Real Estate Financial Planner™ software? These are some additional blog posts.
Adding to Scenarios
Do you want more info on how to add your “stuff” to Scenarios? Learn more with these related posts.