chris wrote:Unlike some, I am less interested in the unitisation and income per unit of the portfolio. I just know how much each shareholding cost me and what it is worth now, plus a spreadsheet of what I have received in dividends from each share per year, how many shares I had and the dividends per share, and how much in total I have achieved in every year.
I take an even lighter view - all I am interested in _really_ is actual vs. target total income received year on year. I think very very few "builders" here think about extrapolating into the future. They are too busy looking in the rear view mirror (and arguing about who has the shiniest one). But this is simple to do and (in keeping with the thread title) we have some excellent
empirical data to help do it, which has two very practical applications -
Firstly, it helps the builder peer beyond the short term - a decade or two further on, say - and plan for their retirement. With a guesstimate of inflation, a target retirement income can also be expressed in "today's money" to help put that in some context.
Secondly, and more relevantly, it serves as a useful "hands-off/hands-on" switch. In years of surplus income (eg. HYP1 13-19) the builder can remain "hands-off", there is no need to tinker, and that surplus can be reinvested or alternatively used to build a cash reserve. In years of shortfall (eg. HYP1 9-12) the builder might choose to be "hands-on" and do some tinkering of poor performers or reinvest any cash reserve.
This is something I have been doing (well, not so much the hands-off/hands-on bit) for fifteen years - I have been thinking about retiring before 60 since well before I was 40, and 5-7 years out I now have a very good idea of what my income will look like plus/minus a margin of safety. Unitisation, income per unit, xirr etc. is all very well but I'm not sure what folk actually
do with this data other than report it. Basket weaving just to keep the inpatients busy, if you like.