1. Timeline & Macro Assumptions
Initial Allocation & Asset Yields
Start ($)
Growth %
Yield %
Visualizing multi-decade capital compounding, inflation drag, refinancing events, and cash flow reinvestment.
The purpose of this calculator is to help you understand two related ideas: compounding and the flywheel effect. The easiest way to use it is to start with a very simple example and then add one element at a time.
Compounding starts with two basic components: time and the rate of return.
Begin with just one asset class. Enter a Starting Value and an assumed annual Growth %. Set the Starting Value of all other asset classes to $0.
For this first example, use no refinancing and set % Net Cash Reinvested to 0%.
Now look at the Capital Engine chart. This is your baseline. Change the Simulation Duration and Growth % and observe what happens. This shows the basic compounding effect: capital earning a return over time, with the return itself becoming part of the growing capital base.
Many assets produce cash flow as well as capital growth. Real estate may produce rent, listed businesses may pay dividends, and private businesses may distribute profits.
Add a Yield % to your first asset while keeping % Net Cash Reinvested at 0%. The Annual Cash Flow Engine now shows the cash produced by the asset separately from its capital growth.
This is important because cash that leaves the investment system no longer compounds inside it.
Now begin reinvesting some of that annual cash flow by increasing % Net Cash Reinvested.
The proceeds of an investment are now being put back to work. They can be reinvested into the same asset class, similar to a business retaining earnings and reinvesting them, or they can be allocated to another asset class.
This is the flywheel effect: productive capital generates proceeds, those proceeds are reinvested, and the additional productive capital can generate further growth and cash flow.
Compounding is the engine. Reinvestment strengthens the flywheel.
Next, introduce a second asset class. You can give it its own Starting Value, Growth % and Yield %, or allow it to grow gradually by directing reinvested cash flow into it using Reinvest Into.
For example, cash generated by real estate could be invested in a listed business, private business or gold. The second asset then becomes another part of the overall compounding system.
Watch how the individual asset lines and total Net Worth change as capital and cash flow are spread across more than one compounding engine.
Only after the basic compounding and reinvestment effects are clear does it make sense to introduce refinancing.
Refinancing allows the model to explore what happens when some of the equity accumulated in an existing asset is accessed through borrowing and redeployed without selling the original asset.
Choose a Refinance Year. Enter the New Debt Drawn and any Old Debt Paid Off. The difference is the Net Extracted Capital available to invest elsewhere.
Then enter the Interest Rate on Debt % and choose the Capital Destination.
The calculator now shows both sides of the decision: the additional capital that has been put to work and the debt and interest cost required to obtain it. Refinancing does not automatically improve the result. Its effect depends on the assumptions you enter.
The top chart shows the development of each asset class, total debt and overall Net Worth. Hover over the chart to see the modeled values for a particular year.
The lower chart shows the income produced by the portfolio, annual interest expense and the resulting net annual cash flow.
The KPI cards provide a quick comparison between the starting position (Year 0), the selected Refinance Year and the Final Year.
The best way to understand the calculator is to establish a simple baseline and then change one variable at a time:
By making these changes one at a time, you can see which component is responsible for the change in capital, cash flow and Net Worth.
The purpose is not to predict the future. It is to make compounding, reinvestment and capital allocation visible, so that different assumptions can be understood and compared.