Forecast is a Python package for comparing investment scenarios. It forecasts the total value of investments in property and a low-cost index fund over a certain period.
“All models are wrong, some are useful.” This model is certainly wrong and oversimplified, but aspires to be at least a little useful.
# install with the ability to modify
pip install --editable .
# run baseline forecast scenarios
python -m forecast.main
The package uses a set of assumptions to model the investment scenarios. These assumptions include:
- Income Surplus: The amount of monthly income available for investment.
- Investment Rate: The expected annual return rate in the stock market.
- Property Valuation: The initial value of the property.
- Bond Rate: The annual interest rate of the bond.
- Bond Term: The term of the bond in years.
- Monthly Insurance: The monthly cost for home owner's insurance.
- Monthly Taxes: The monthly cost for property taxes.
- Monthly Levies: The monthly cost for levies.
- Transfer Duty: One-time cost for transfer duty.
- Lawyer Fees: One-time cost for lawyer's fees.
- Property Appreciation Rate: The expected annual property appreciation rate.
- Deposit: The initial deposit for the property.
- Monthly Rental Income: The monthly rental income from the property.
- Property Sale Commission Rate: The commission percentage for property sale.
- Rental Escalation Rate: The annual escalation rate for rental.
- Property Expenses Escalation Rate: The annual escalation rate for property expenses.
- Inflation rate: Assumed annual inflation rate used to calculate the real value of investments.
- Rental management percentage fee: The (optional) percentage of the coming year's total rental income charged by the agent for procurement and management.
The package compares the following scenarios:
-
Property Investment Scenario: In this scenario, the income surplus is used to pay for the monthly bond repayment, property-related expenses, and any additional investment into the property. The property is assumed to appreciate at a given rate, while property expenses and rental income escalate annually. The value of the property investment is calculated monthly, taking into account the outstanding bond balance and any selling commission.
-
Stock Market Investment Scenario: In this scenario, the income surplus is invested monthly into a low-cost index fund, assumed to provide a certain annual return rate. The value of the stock market investment is calculated monthly, with reinvestment of returns.
These scenarios provide a comparative analysis of investing in property versus the stock market over a certain period, given a set of investment assumptions.