Build your own Financial Planning Spreadsheet (part 1)

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Starting with blank excel spreadsheet, together we build a financial model that include multiple savings levels, return / return expectations, time horizons, and scenarios. Almost certainly there is some for everyone interested in planning finances!

Comments

toiletNerd says:

Hi Lars,

Great video as always. I have a general question though, could you talk a bit more about the inflation calculation in the video in the next one? Is 2% a good annualised figure over time for it?

And just a word of thanks for your other videos. Owing to these, I sorted out some old pension schemes which had ridiculous management fees, and currently have my S&S ISAs into a decent state.

Ole Husgaard says:

This is really useful for the average retail investor to get an idea about the expected compound return over the years. It is really worth to listen to your videos.

Personally I started out taking a lot higher risk when I was younger. For the first decade of my work life after finishing education I did not invest in the traditional sense, but only invested in myself: Improving my skills was most important because I knew this would enable a higher income later, and also enable me to know when it would be good to make an investment in my field of work.

In 2003 I made my first real investment in a single stock (not considering a small equity investment I bought as a teenager and sold again when I entered university). But knowing the company and their field of work from a decade of work learning about this type of business I was confident, although I knew the risk was very high. That was my best (and probably most risky) investment ever, but it formed the basis of my current fortune. Now I am lowering my risk by diversifying from this single investment, and as I become older I expect to further lower my investment risk.

I like how you do not just provide a spreadsheet, but teach how such a spreadsheet can be built. Only by learning how to build such a spreadsheet yourself do you IMHO learn the insights you are trying to teach, and this is also the best way to learn how to build the spreadsheet to best fit your own personal situation.

In your following videos in this series I am looking forward to see how you incorporate risk in the planning spreadsheet. And I hope you will also try to incorporate the idea of less risk-willingness as you get older.

John Simpson says:

Thanks Lars. Really useful. Save my finances and learn some Excel! Looking forward to next videos. One thing I will be playing about with will be thinking about the impact of the "pot" on when you stop paying in and start living off it. I suppose the options are living off the returns you get at the point you stop paying in (pot stays the same) or you actually start to spend the pot (reduce inheritance for kids!!). I guess this is where you need to know how long you might need the money for. Would be good to hear your thoughts.

Harale says:

Great video! What do you think about holding all assets in your portfolio in another currency? Most of the best ETFs are in USD, but my local currency is the Norwegian Krone. I pay a bit more in currency spread and fee's, but the USD ETFs are cheaper than my local alternative.

JacFreDK says:

Hello Lars

Good video as always. One thing I would also find interesting is if you could show how to introduce progressive taxation of the investment returns in the model. For example in Denmark equity returns up to 51,700 kr. are taxed with 27 % and after that with 42 %.

Accuria123 says:

Hej Lars, mange tak for din video, ser frem til de næste i denne lille serie.
Jeg har et spørgsmål omkring porteføljesammensætning, som jeg håber du kan svare på.

Hvis vi antager, at jeg vælger den passive investeringsstrategi med indeksforeninger for alle pengene, hvordan afgører jeg så, hvilke vægte de enkelte foreninger skal have i min portefølje, og hvor mange foreninger jeg skal sprede mine penge over? Her tænker jeg med hensyn til min risikoprofil, alder osv.
Jeg læser oppe på universitetet og de fleste professorers svar er blot at hente tilpas historisk data på foreningerne og smække dem ind i Markowitz' moderne portefølje teori, hvorefter jeg maksimerer sharpe ratioen. De selvsamme professorer har dog vist os utallige studier, som går direkte imod denne tilgang og som påviser, at denne strategi faktisk klarer sig dårligere i virkeligheden end en simpel ligevægtsfordeling.

Helt konktret, hvordan vælger jeg så optimalt set det rette antal indeksforeninger og de optimale vægte for disse, for at matche min personlige risikoprofil og tidshorisont?
Kan du evt. spore mig i retning af nogle bøger/artikler omkring emnet?

Mange tak!

albi55uk says:

Thanks for the video. Can you share this spreadsheet?

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