Lifetime Planner - Why does the inflation factor seem to only decrease portfolio value

Quicken Windows 2017 Member ✭✭
in Budgeting and Planning Tools (Windows)
Why does it appear as though the inflation factor decreases the portfolio value each year vs increase annual spending? Is this theoretically correct? If not, how do I increase annual spending by 3% (or other) per year and not impact portfolio value?

Thank you!

Best Answer

  • Member ✭✭✭✭
    Answer ✓
    over on the upper right in settings, there is a button to display the values in future or today's values.  It will default to 'todays' values, so if inflation is greater than the return on the investment, the values will get smaller over time, since it's measured in today's dollars.

    if you change the setting to future value, and the return is greater than the inflation rate, the values will go up over time.

    in the plan assumptions there is an inflation value and a return on investment options.  Suggest setting those appropriately, 

Answers

  • Member ✭✭✭✭
    Answer ✓
    over on the upper right in settings, there is a button to display the values in future or today's values.  It will default to 'todays' values, so if inflation is greater than the return on the investment, the values will get smaller over time, since it's measured in today's dollars.

    if you change the setting to future value, and the return is greater than the inflation rate, the values will go up over time.

    in the plan assumptions there is an inflation value and a return on investment options.  Suggest setting those appropriately, 
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