{"id":61,"date":"2024-05-21T10:14:18","date_gmt":"2024-05-21T10:14:18","guid":{"rendered":"https:\/\/www.gallowgate.org\/docs\/?page_id=61"},"modified":"2024-10-17T10:40:27","modified_gmt":"2024-10-17T10:40:27","slug":"incomes-investments-costs","status":"publish","type":"page","link":"https:\/\/www.gallowgate.org\/docs\/incomes-investments-costs\/","title":{"rendered":"Incomes, Investments &amp; Costs"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Incomes, Investments and Costs are all configured in a similar way, but relate to specific aspects of your scenario.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1080\" height=\"483\" src=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/income-investment-cost-1.png\" alt=\"\" class=\"wp-image-144\" srcset=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/income-investment-cost-1.png 1080w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/income-investment-cost-1-300x134.png 300w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/income-investment-cost-1-1024x458.png 1024w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/income-investment-cost-1-768x343.png 768w\" sizes=\"auto, (max-width: 1080px) 100vw, 1080px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Incomes are for recurring amounts of money you will receive. They are for a known amount and are not subject to fluctuations in the stock market or bonds returns. Examples of these are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>State pension<\/li>\n\n\n\n<li>Defined benefit pension (e.g. final salary pensions)<\/li>\n\n\n\n<li>Rental income for additional properties<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Investments are for accounts which do not provide a regular income, but which you can draw down from. Examples of these are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Savings accounts<\/li>\n\n\n\n<li>ISAs<\/li>\n\n\n\n<li>Defined contribution pensions (e.g. private pension) <\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Costs are for recurring or one-off expenditure. Examples of these are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Mortgage payments<\/li>\n\n\n\n<li>Car payments<\/li>\n\n\n\n<li>Special holidays<\/li>\n\n\n\n<li>Gifts for children<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Common Configuration Elements<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Each configuration sections has a number of common elements:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8216;+&#8217; button &#8211; this will add an additional row to the section<\/li>\n\n\n\n<li>A toggle switch on the left side of each row &#8211; you can use this to disable a row so that it is not used in calculations<\/li>\n\n\n\n<li>A set of buttons on the right side of each row\n<ul class=\"wp-block-list\">\n<li>A &#8216;pencil&#8217; button which will expand the row and show additional configuration<\/li>\n\n\n\n<li>An &#8216;up&#8217; button to move the row up one<\/li>\n\n\n\n<li>A &#8216;down&#8217; button to move the row down one<\/li>\n\n\n\n<li>A &#8216;trashcan&#8217; to delete the row. You will always be asked to confirm this.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Name<\/li>\n\n\n\n<li>Amount &#8211; the value at the &#8216;Start Year&#8217;<\/li>\n\n\n\n<li>Start Year &#8211; the year from which this will be included in the calculations<\/li>\n\n\n\n<li>End Year &#8211; the year up to which this will be included in the calculation. This is not relevant to investments.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Income Additional Configuration<\/h4>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1073\" height=\"186\" src=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-2.png\" alt=\"\" class=\"wp-image-146\" srcset=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-2.png 1073w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-2-300x52.png 300w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-2-1024x178.png 1024w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-2-768x133.png 768w\" sizes=\"auto, (max-width: 1073px) 100vw, 1073px\" \/><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Growth &#8211; set the amount that the income will change each year. The options available are:\n<ul class=\"wp-block-list\">\n<li>Flat &#8211; no change or -2% after inflation<\/li>\n\n\n\n<li>Inflation &#8211; rises with inflation so remains the same<\/li>\n\n\n\n<li><a href=\"https:\/\/www.moneyhelper.org.uk\/en\/blog\/retirement\/state-pension-triple-lock\">Triple Lock<\/a> &#8211; the UK&#8217;s state pension increase which is assumed to be 1.5% over inflation<\/li>\n\n\n\n<li>Custom &#8211; set your own annual change percentage<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Tax &#8211; how is this income taxed?\n<ul class=\"wp-block-list\">\n<li>None &#8211; not tax is applied<\/li>\n\n\n\n<li>Income Tax &#8211; UK income tax is applied<\/li>\n\n\n\n<li>Inc. Tax &amp; NI &#8211; UK income tax and national insurance contributions applied<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><a href=\"https:\/\/www.hl.co.uk\/retirement\/ufpls#:~:text=What%20is%20an%20Uncrystallised%20Funds,entire%20payment%20is%20tax%20free.\">UFPLS<\/a> &#8211; will you receive additional tax relief on this income? Only visible when Income Tax selected.<\/li>\n\n\n\n<li>Rules &#8211; see <a href=\"https:\/\/www.gallowgate.org\/docs\/rules\/\" data-type=\"page\" data-id=\"67\">Rules <\/a>documentation.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Investment Additional Configuration<\/h4>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1071\" height=\"148\" src=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-1.png\" alt=\"\" class=\"wp-image-80\" srcset=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-1.png 1071w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-1-300x41.png 300w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-1-1024x142.png 1024w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/investment-additonal-config-1-768x106.png 768w\" sizes=\"auto, (max-width: 1071px) 100vw, 1071px\" \/><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Growth &#8211; set the amount that the income will change each year. The options available are:\n<ul class=\"wp-block-list\">\n<li>Cash &#8211; no interest so -2% after inflation<\/li>\n\n\n\n<li>Savings &#8211; 1% over inflation<\/li>\n\n\n\n<li>Bonds &#8211; 1.2% over inflation<\/li>\n\n\n\n<li>Low (20% Equities) &#8211; 1.92% over inflation<\/li>\n\n\n\n<li>Mid (40% Equities) &#8211; 2.64% over inflation<\/li>\n\n\n\n<li>Balanced (60% Equities) &#8211; 3.36% over inflation<\/li>\n\n\n\n<li>Mid\/High (80% Equities) &#8211; 4.08% over inflation<\/li>\n\n\n\n<li>100% Equities &#8211; 4.8% over inflation<\/li>\n\n\n\n<li>Custom &#8211; set your own annual percentage change<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Tax &#8211; how is this income taxed?\n<ul class=\"wp-block-list\">\n<li>None &#8211; not tax is applied<\/li>\n\n\n\n<li>Income Tax &#8211; UK income tax is applied<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Fund Target &#8211; at the end of the year a &#8216;rebalancing&#8217; happens where funds from other investments are used to top up an investment to its desired &#8216;fund target&#8217; if its current balance is lower than that. For more detail see the <a href=\"https:\/\/www.gallowgate.org\/docs\/scenario-calculation\/\" data-type=\"page\" data-id=\"75\">Scenario Calculation<\/a> guide.<\/li>\n\n\n\n<li>Always Take Tax Free Amt &#8211; do you always want to take funds up to the annual tax free amount? Only visible when Income Tax selected.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.hl.co.uk\/retirement\/ufpls#:~:text=What%20is%20an%20Uncrystallised%20Funds,entire%20payment%20is%20tax%20free.\">UFPLS<\/a> &#8211; will you receive additional tax relief on this income? Only visible when Income Tax selected.<\/li>\n\n\n\n<li>Rules &#8211; see <a href=\"https:\/\/www.gallowgate.org\/docs\/rules\/\" data-type=\"page\" data-id=\"67\">Rules <\/a>documentation.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Cost Additional Configuration<\/h4>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1070\" height=\"117\" src=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/cost-additonal-config.png\" alt=\"\" class=\"wp-image-82\" srcset=\"https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/cost-additonal-config.png 1070w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/cost-additonal-config-300x33.png 300w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/cost-additonal-config-1024x112.png 1024w, https:\/\/www.gallowgate.org\/docs\/wp-content\/uploads\/2024\/05\/cost-additonal-config-768x84.png 768w\" sizes=\"auto, (max-width: 1070px) 100vw, 1070px\" \/><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Growth &#8211; set the amount that the income will change each year. The options available are:\n<ul class=\"wp-block-list\">\n<li>Single &#8211; this is a one off cost and when selected no End Year configuration will be shown<\/li>\n\n\n\n<li>Flat &#8211; no change or -2% after inflation<\/li>\n\n\n\n<li>Inflation &#8211; rises with inflation so remains the same<\/li>\n\n\n\n<li>Custom &#8211; set your own annual change percentage<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">The Significance of Order<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The order of the rows is important as this affects the calculation. In general the calculation does the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Take withdrawals and add them to any active costs to get total amount needed for the year<\/li>\n\n\n\n<li>Take all Income<\/li>\n\n\n\n<li>Working from the top row of investments and going down withdraw funds to reach the desired annual withdrawal<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The order that investments are drawn down from can make a large impact on the success of the plan. This ordering, in conjunction with the ability to set Fund Targets allows for multi-pot strategies to help mitigate risk. More on this in the <a href=\"https:\/\/www.gallowgate.org\/docs\/scenario-calculation\/\" data-type=\"page\" data-id=\"75\">Scenario Calculations<\/a> guide.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Estimated Investment Returns<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The estimated stock and bonds returns have been determined from <a href=\"https:\/\/www.blackrock.com\/institutions\/en-gb\/insights\/charts\/capital-market-assumptions\">https:\/\/www.blackrock.com\/institutions\/en-gb\/insights\/charts\/capital-market-assumptions<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Incomes, Investments and Costs are all configured in a similar way, but relate to specific aspects of your scenario. Incomes are for recurring amounts of money you will receive. They are for a known amount and are not subject to fluctuations in the stock market or bonds returns. Examples of these are: Investments are for [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"class_list":["post-61","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/pages\/61","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/comments?post=61"}],"version-history":[{"count":10,"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/pages\/61\/revisions"}],"predecessor-version":[{"id":259,"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/pages\/61\/revisions\/259"}],"wp:attachment":[{"href":"https:\/\/www.gallowgate.org\/docs\/wp-json\/wp\/v2\/media?parent=61"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}