Rates, Yields and Currencies

Quick-Start: Optional.

Set Default expected rates of return by asset class. This will allow you to change the default rates applied to all newly entered investments, or even change them for already added investments. See the Help on that page for details.

Set Long-Term expected rates of return by asset class. This will allow you to set the long-term rates of asset classes and set the TIME MACHINE to apply them to all investments after a given number of years from today. See the Help on that page for details.

Set-up Market Crashes You can automatically set up future rates to simulate one or more equity market crashes to be used by the TIME MACHINE. See the Help on that page for details.

Set up new market simulation You can set up simulated rates using an actuarial model to be used by the TIME MACHINE. See the Help on that page for details.

The table shows all the rates set and the dates they will apply in the TIME MACHINE. Here you can set future rates, yields, and currency exchange rates. This will allow you to conduct scenarios and test your financial plan.

This feature is useful for entering changes in loan rates, changes in inflation, and exchange rates. You can also change the rates of expected return for individual investments. It is an optional feature. The rates entered in your previous forms (loans, accounts, and investments) will apply as defaults if you do not edit and add rates here. The rates on this page will take precedence over the rates entered in the individual input screens for your loans, real estate, and investments. However, those default values will not be changed. However, if you're running a TIME MACHINE with long-term rates, market crashes, or market simulations, those simulated rates will apply. Important: If you change a default rate (on another screen), the rate set for today here will be set to that new default rate.

If you have a lot of rates set, use the search function above the table, for example, you can search for "inflation" or "prime", or any investment or account name

You can add future exchange rates by selecting 'edit' and switching the start date of the rate to a future date. Editing the start date of a rate will add a new rate, at that date, and it will insert itself appropriately.

To reset the rates to the default, select 'delete/reset'.

Inflation

The rate of inflation will affect all indexed incomes, expenses, savings, and real estate. The current inflation rate is obtained from the Bank of Canada nightly. To get the latest rate click on `Update', otherwise, the default rate is set to 2%, the Bank of Canada target rate, which is most appropriate for long-term financial planning.

Prime

The bank prime rate will affect LOANS with interest linked to the prime rate. The default prime rate is obtained from the Bank of Canada nightly. To get the latest rate click on `Update'.

Loans

When you inputted data about your loans, you included the current interest rate. These rates may change for variable rate loans (with changes in prime rate) and at loan renewal (select 'renew' to set a new rate at renewal). We assume that loans will all be renewed for the same length of term.
Any variable rate loans have their rate linked to the prime rate, and you will be able to make changes to the prime rate here.

For term loans, you will be able to see the effect of any rate changes to the amortization table in LOANS

It is a good idea to go back to the LOANS page after changing any rates here, to see how your payments change (since the amortization length will not be changed, but your payments might be).

Real estate

Real estate will always be indexed by the rate of inflation. However, you can increase or decrease the rate for any property.

Investments

You can set the rates for capital gain, dividend, and income separately for each investment.
You can change those rates for future dates, by selecting 'edit rate'. If you change the start date of a rate, a new entry will be added.
Note that you can not modify future yields for target date funds. Those future yields will depend on the asset allocation of the fund and are already modeled in the TIME MACHINE

If you have fixed-income investments with a given maturity date, you can renew the investment from that maturity date. You can set a new rate and a new term. If not renewed the TIME MACHINE will put in the Cash investment of the account, where it can be withdrawn or reinvested at the same rate with no maturity date.

If you checked the box to use the long-term expected rates of return in the TIME MACHINE, those rates will override any of the rates entered here once the long-term rates are started.

Currencies

If you have accounts, loans, or real estate in a foreign currency, the current exchange rate is automatically calculated.

The graphs underneath the table display the changes in rate over time. The curve for real estate includes added inflation.