Methodology

Principle: show the assumptions

Finance Charts tools are designed so the important assumptions can be inspected rather than hidden behind a single output. A result is only as meaningful as the inputs, calculation method and data behind it.

Projection mode

Projection tools use mathematical assumptions rather than recorded market history. They are simplified scenarios, not forecasts.

Lump Sum vs DCA projection

The current Lump Sum vs DCA calculator compares two strategies using the same starting capital, investment horizon and assumed market return.

• Lump sum: all capital is invested immediately.
• DCA: an equal share of the original capital is moved into the investment at the start of each scheduled month. On the final DCA month, any remaining undeployed cash is invested.
• Idle cash: money waiting to be invested earns the cash return entered by the user.
• Fees: the annual fund fee is applied to both invested strategies.
• Compounding: annual assumptions are converted to equivalent monthly rates for the simulation.

The calculator currently treats the selected currency as a display unit. It does not perform foreign-exchange conversion or model currency risk.

Investment Fee Calculator

The Investment Fee Calculator compares two annual fee assumptions while holding the starting investment, monthly contribution, gross return assumption and horizon constant. Each fee reduces the annual growth factor multiplicatively before conversion to an equivalent monthly factor. Monthly contributions are added at the start of each modeled month.

The calculator also shows a 0% fee benchmark. The difference between that benchmark and a fee-bearing projection is labelled ending-value drag. It includes both the direct effect of the modeled annual fee and the compounding that the deducted amount can no longer earn; it should not be interpreted as a statement of fees directly invoiced or paid.

Monthly Investment Calculator

The Monthly Investment Calculator models a starting balance plus recurring monthly contributions. Contributions are added at the start of each modeled month. The gross annual return and annual fund fee are combined multiplicatively and converted to an equivalent monthly growth factor before the monthly balance update.

Total contributed is tracked separately from modeled investment growth. The inflation-adjusted ending value discounts the nominal ending value using nominal ending value ÷ (1 + annual inflation)^years. Inflation is held constant for the projection and is not a forecast.

Cash Floor Worksheet

The Cash Floor Worksheet uses a Finance Charts planning formula:

cash floor = essential monthly expenses × reserve months + planned spending + irregular expenses + extra buffer

This is an organizational framework, not an official regulatory formula and not a recommendation about how much anyone should hold or invest.

Historical mode

Historical functionality is currently a development feature and uses an explicitly synthetic fixture for engineering tests. Synthetic fixture results are not market evidence and must not be used for public historical claims.

Finance Charts will not publish a historical market-data mode until the relevant data rights are confirmed for the intended public use. Any future public historical dataset should disclose its provider or source, asset or proxy identity, date coverage, currency, return type, dividend treatment, fee treatment and important limitations.

Rounding and presentation

Interfaces may round values for readability while calculations use higher precision internally. Small differences can therefore appear between displayed intermediate values and final calculations.

What the models leave out

Unless a tool explicitly says otherwise, projections may not model taxes, transaction costs, bid-ask spreads, changing interest rates, investor behaviour, platform fees, currency movements, changing contributions or the sequence of real future market returns. Read the assumptions shown on each tool before interpreting a result.

Updates

Methodology changes that materially affect outputs should be documented alongside the relevant tool or in the project methodology. Historical methods should be revalidated whenever the data source or adjustment method changes.