The first thing to do is to write the data at the basis of the savings plan:
- Initial investment: the amount invested at the beginning at T(0);
- Periodic investment: the amount invested at every T(x);
- Number of investments: the number of periodic investments which characterise the investment plan.
After writing these data and selecting the currency and the language, click on “UPDATE”. This way, Ant will draw the first line “Value of the deposits”, which represents the total amount of deposits at each T(x).
Move on to the “Price” graph to select the starting price of the market at T(0). It is set on 100 by
default but you can amend it.
Now is the moment to develop a hypothetical trend of the market to highlight the strengths of the Dollar Cost Averaging applied to the Savings Plan.
You should model the trend in chronological order; for example you can move, using the mouse to click and drag the prices at each T(x), the points T(5) and T(10), but not the other way round.
Once finished modelling the “Price” graph, you can go back to the Ant graph to analyse your Savings Plan.
Moving on the Ant chart you will notice three lines:
- the black line represents the total value of the deposits at each T(x);
- the red line represents the trend of the investment, in case the total amount (“starting investment” + “periodic investments”) had been invested all together at T(0), considering the market trend drawn in the “Price” graph;
- the blue line represents the trend of the Savings Plan at each T(x).
This representation clearly highlights the benefits of the Dollar Cost Averaging, which are the lowering of the volatility and the possibility to generate consistent earnings even with not very favourable market phases.
In the right key the final values of each line are described and, in brackets, the difference in percentage with the final value of the Savings Plan.
By clicking on the names of the lines above, under “Ant Chart”, you can select your preferred lines and hide those deemed not useful to your study on the Savings Plan.
You can perform these actions without limits and restrictions.
Moving the mouse on each time T(x), the top-right key will describe the values of each line on the time T(x) highlighted.
Thanks to the function “ENABLE ADDITIONAL INVESTMENTS” you can create additional deposits to make your Savings Plan more effective, by increasing the invested capital in particular market conditions (drawn in the “Price” graph).
The deposits must be added in chronological order.
A new green line will be drawn, which represents the Savings Plan including the additional deposits enabled.
All the lines will automatically adjust to the new additional deposits, increasing the amount of “single investment” and “starting investment” of the Savings Plan so to make all the studies compatible.
With the addition of the new green line, all the functionalities will remain unchanged.
Moreover, you will be able to save the work done, both online and in PDF format, and to resume it whenever you want. These functions are visible by clicking on the three lines at the top right of the web page.
Further functionalities will soon be added, even upon your request.
ANT represents an effective interface able to show the trends and the potential of an appropriate financial plan.
From our graphs it is evident, for example, how the adoption of the Dollar Cost Averaging method applied to the Savings Plan allows a safe and beneficial entry in the market; on the contrary, the investment in a single solution remains risky and unadvisable. The difference between the two approaches becomes exponential in terms of income when downward external conditions occur. A different name and identity could not be chosen for a project in favor of the saver, who is seen as an ant, which accumulates in the most prosperous periods and consumes in the least advantageous ones, as told in Aesop's fable.
Ultimately, ANT is a reliable and immediate tool for the use of each Investor and Financial Advisor.