Sandringham Cashflow Modelling Assumptions - May 2022
These are the assumptions we use in our cashflow modelling.
We use available investment and market data to decide upon a reasonable assumption on which we can base your financial plan. In some cases, it is necessary to use data that maintains the integrity of the model, as opposed to strictly adhering to specific data points. In any event your cashflow model is designed to be a snapshot of your possible future financial position at a point in time. You will derive the most value from these models where they are reviewed and updated regularly.
A cashflow model is not an illustration or a guarantee. Past performance is not a guide to the future. Your investments can fall as well as rise and you may not get back the full amount you invested.
GENERAL ASSUMPTIONS
| Assumption name | Data used | Assumption Figure | Commentary |
| UK inflation | UK Consumer Price Index (CPI) | 2.5% | CPI is the widely accepted measurement of how the price of goods and services are changing. It’s important to build this into your model to account for changes in the ‘spending power’ of your money over time. |
| UK House Prices | UK House Price Index | 3.35% | The house price index is a broad assumption about the changing price of residential property in the UK. Remember that all property valuations are subjective and very sensitive to geography and condition. |
| Savings above expenditure | 10% | This is the amount of money from your regular income that is not explicitly spent. ‘Deliberate’ savings will be shown separately in your cash flow model. |
INVESTMENT RETURNS
| Investment Returns Risk Profile 2 |
CPI Variable | Linear – 2.44% | Where possible we use real historic investment data appropriate to your investment holdings. Remember, past performance is not a guide to the future and investments do not grow in a linear fashion. |
| Investment Returns Risk Profile 3 |
Investment Association Sector Benchmark IA 0-35% Mixed Investments |
Linear – 6.23% | |
| Investment Returns Risk Profile 4 & 5 |
Investment Association Sector Benchmark IA 20-60%% Mixed Investments |
Linear – 6.89% | |
| Investment Returns Risk Profile 6 & 7 |
Investment Association Sector Benchmark IA 40-85% Mixed Investments |
Linear 7.69% | |
| Investment Returns Risk Prolife 8,9 & 10 |
Investment Association Sector Benchmark IA Flexible Investment |
Linear 8.34% |
MARKET EVENTS
| Market Event Risk Profile 3 |
Investment Association Sector Benchmark IA 0-35% Mixed Investments |
1st year drawdown -13.98% 12th year drawdown |
Markets fall as well as rise. Where we have used a Linear growth rate, we need to add a realistic period of loss to your model. Investments fall as well as rise. These losses represent changing values in your portfolio. They only become ‘real’ losses if you encash/sell your investment after the loss. |
| Market Event Risk Profile 4 & 5 |
Investment Association Sector Benchmark IA 20-60%% Mixed Investments |
1st year drawdown -21.46% 12th year drawdown |
|
| Market Event Risk Profile 6 & 7 |
Investment Association Sector Benchmark IA 40-85% Mixed Investments |
1st year drawdown -30.13% 12th year drawdown |
|
| Market Event Risk Profile 8,9 & 10 |
Investment Association Sector Benchmark IA Flexible Investment |
1st year drawdown -34.86% 12th year drawdown |