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Planning Retirement Online


You can do IT in later life


December 2006

You can do IT is a regular feature of laterlife.com aimed at trying to help laterlife visitors make the most of Information Technology on or off the web. 

Jackie Sherman who runs the You can do IT Question & Answer section is an IT trainer and author. Jackie has spent her career in education and specialises in teaching IT to adults. Her courses for adults include such topics as MS Office, the Internet, e-mail and basic web page authoring.  

Jackie has also written several books - you can find more details about these by clicking here. Jackie has also been running a course specifically for over 50s.

Via laterlife.com Jackie aims to particularly help those new to IT and the web to build up knowledge and confidence, so no question is too basic. At the same time she will cover Q&As for the more experienced user. 

So if you would like to ask a question of Jackie, or if you have discovered something which may be of interest to others in making the most of the web, then she would love to hear about that too. Why not email her jackie@laterlife.com



 

DECEMBER 2006

 

Using spreadsheets for complex everyday decisions

This week, I want to show you how to simplify what might seem a complicated calculation using a spreadsheet package such as Excel.

There are many decisions we have to make in our lives such as whether to buy a new house, which holiday to go on, or if it is better to rent or buy a digital television etc. that can look daunting at first sight. However, if you break it down into its individual components, it becomes far more manageable.

Today, I will take the example of buying a share in a boat to show you how you could set up a spreadsheet to help answer your questions and come to the right decision.

Imagine you are interested in narrowboat holidays but do not want to own your own boat. The answer may be to share the cost with others. This is a developing area and many companies on the Internet advertise 12th shares in boats. You book time-slots, take the boat out 3 or 4 times a year and can eventually sell your share if you no longer require it.

Before buying a share, there are a number of questions you need to ask yourself:


1. What age boat should you buy a share in?
2. What price should you spend on the actual share?
3. What will the running costs be (e.g. mooring fees, licence, servicing, etc)?
4. Does the boat you pick need any major expenditure e.g. a new engine?
5. Should you pay an annual insurance premium that guarantees that the company will buy the share back off you at the time you want to sell it? (If not, you may incur extra running costs whilst you wait for a purchaser.)
6. Is it cheaper to hire a boat whenever you want a holiday, rather than buy a share at all?

Step 1Gather all the information together.
Here is what your research might reveal:


a. The cost of a week's hire. This, at peak season, averages ?1,200, so four week-long holidays a year, with two at low season, could cost ?3,500 - ?4,000.
b. Interest lost on the amount spent on the share e.g. about 5% per year.
c. The likely value of the share in a few years' time, when you might want to sell it again. Research shows that shares lose about ?200 p.a. for older boats but nearer ?500 for new ones.
d. The average running costs for 1/12th share in a narrowboat. Let's say that this is going to be ?1,300 p.a. if no major repairs are needed. Over 10 years, though, you might need to buy a new engine and have the outside repainted. This means that over 5 years an older boat would cost more like ?1,400 p.a. although a new boat would stay at ?1,300 as it would not need major work for many years.
e. The cost of buy-back insurance. Necessary for an older boat that could take longer to sell, this can be around ?120 p.a.

Step 2 set up the spreadsheet. You need to have entries for:

 

  • Number of years in scheme

  • Rate of interest your money would get in a bank

  • Capital spent on the share

  • Estimated value of the share when resold

  • Annual Maintenance costs + any large expenditure

  • Buy back option p.a.

If you keep the shares 5 years and buy a share in an older boat that costs ?2,000 and loses ?200 p.a., this is how it would look:




If you bought an ?8,000 share in a newer boat, maintenance would be less and you would not take out buy back insurance but the share would be worth less over time.



 

For any pre-2002 boat, you would need to check whether a replacement engine/paintwork had been carried out recently, so that you could be sure that running costs would be at the lower level.

Step 3Final calculation.

With all the financial facts in place, you can now work out the cost to you of a share in differently aged narrowboats, compared to hiring over the same period.

The cost of the share would be:

Cost of maintenance (+ insurance for older boat) + loss of interest on your original capital + loss of value of the share.

New boat:

 



Old boat:

 

 


If hiring costs ?20,000 over 5 years, a share is clearly much cheaper – but when it comes to newer boats, perhaps not as cheap as you might first have thought.


 


View previous editions of YoucandoIT for more useful Questions and Answers
 

For a wealth of books on the web and IT generally, visit Amazon and under the books section select Computers and Internet.

Don't forget to visit the general laterlife features section called laterlife interest

 


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