Create Your Investing Plan!
Based on NAOI teaching experience and working with hundreds of individual investors we realized that most people do not have a good grasp of their current financial situation or of their financial goals. Without this vital information people were essentially investing "in the dark" without a defined purpose or plan. To solve this problem we looked on the Web for the tools that would enable people to create a coherent Investing Plan. We couldn't the resources we were looking for so the NAOI R&D Division developed them. in the form of the financial calculators and worksheets that you can access in this section of the Web.
This page is the gateway to a set of calculators that you can use to develop and document your Investment Plan; a roadmap for reaching the financial goals you really want to reach in life - not goals that an advisor tells you that you can expect based on their risk profile. The NAOI calculators are explained below along with links to them. Documenting your financial status and setting goals is a critical component of the investing process. Using each of these calculators to create your unique Investing Plan is a must for every successful investor.
These calculators are available for licensing by Financial Organizations. Contact NAOI President Leland Hevner at LHevner@naoi.org for licensing information.
Return Required to Reach Your Goals
This calculator enables you to set an amount of money that you want to have at a point in the future that you specify. It asks for your investing goal and several items of information. Then it shows you the average annual Rate of Return required of a portfolio to meet your goal. This rate of return will tell you if your goal is feasible or not. If not, you can change the calculator inputs until you arrive at a feasible number. Dynamic Investing, that is discussed on this site, enables you to aim for goals that are significantly higher those provided by traditional portfolios designed by advisors today. So, we suggest that you learn about DIs before using this calculator.
The Power of Compounding
This calculator shows the incredible power of investment "compounding." By saving just a small amount of money on a regular basis you will be amazed at how much money you will have at the end of multiple years. This calculator allows you to enter an amount that you can save each month and an expected interest rate for these savings. It then shows you how much you will accumulate at different future time periods in the future if your account value is allowed to compound - i.e. if you don't withdraw money and all earnings are reinvested.
This calculator gives you a feel for the factors that affect wealth accumulation and the amounts you can expect at multiple times in the future. You can change calculator inputs to see the affect on how your money accumulates. By varying inflation, return rate and your monthly deposit amount you will be able to see how the smallest change in any one variable is magnified significantly over periods of years.
This is the first of two calculators that will determine how much money you can contribute to your investing plan on a monthly basis. It will help you to identify those "Hidden Expenses" that don't come up every month and are often overlooked in a budgeting process. The results of this calculator will then become one input to the Cash Flow Calculator (see below) where you will document your more obvious monthly expenses and determine the amount of money you have available each month for reaching your investing goals.
Cash Flow and Money Available for Investing
Use this calculator to determine the amount of money you can devote to your investing plan on a monthly basis. The bottom line of the calculator shows the cash you have available at the end of each month after taking into account your income and expenses, including the Hidden Expenses from the calculator discussed just above. This is called your discretionary income. You may or may not wish to use all of your positive cash flow for investing purposes - that decision is yours. The amount you decide to dedicate to your investments is one input to the Return Required Calculator listed above and obviously the more you contribute to your Investing Plan on a regular basis, the more feasible your ultimate investing goal becomes.
Use this calculator to document and determine the value of your Total Assets. The total from this calculator will be entered into the Liabilities and Net Worth Calculator discussed below.
Liabilities and Net Worth
Use this calculator to determine your Net Worth. Start by entering the total from your Total Assets Worksheet. Then enter your Liabilities. Clicking the Calculate button will show your Total Liabilities and your Net Worth.
Your Investing Plan
Use your browser print function to produce a hardcopy of each of these calculators to document the inputs and results of each of the above calculators. Then put them together to create your complete NAOI Investing Plan. And keep in mind that this Plan will need to be changed periodically as your financial profile changes. So come back here and create a new plan when you get a job promotion, inherit some money, have an unexpected major expense, etc. You Investing Plan is a living document. Don't let it go stale.
You now have a Plan for meeting the financial goals you really want to achieve in life. Now, and only now, are you ready to invest! Continue your journey to financial independence with NAOI Education Resources.