If you have 2% inflation over a year, then the monthly compound rate can be calculated by taking the 1/12th root of that. You have to convert 2% (0.02) to add 1 to that (1.02) and then take the 1/12th root (on a calculator or its typically shown as x^y), and then you have the monthly factor i.e. 1.0016515813 ... by which to multiple Portfolio Control each month, that will over 12 months have uplifted (compounded) it by 2%.
So if PC starts at 10000 in January, and otherwise remains unchanged (no AIM trades) the next month, then 10000 x 1.0016515813 = 10016.515813 = PC value for February, and then times that again by 1.0016515813 = 10033.0589032 PC value for March ...etc. By the end of December and PC will (assuming otherwise unchanged) be 2% higher than at the start of the year.
Of course if inflation changes, isn't 2% but the recent prevailing rate has risen to say 4% then 1/12 = 0.08333 so calculate 1.04^0.08333 = 1.00327373978 - which is the monthly Portfolio Control multiplication factor that would uplift it in reflection of a 4% inflation rate.
You might find this spreadsheet mind blowing and of no use, however I've linked it just in case it does contain some hints/clues as to how you might do things in Excel/Libre Office Calc. One of the worksheets is Steve's AIM Bare that contains the AIM monthly reviews, there are also images posted into the spreadsheet and it fully accounts and compares a AIM of small cap value with 10 year treasury as AIM's 'cash' and 80% cash settings to buy and hold (monthly and yearly rebalanced 20/80 small cap value/10 year treasury).
Have a look, if you find it of no use, just confusing, then ignore it (you might still find reading the 'Notes' worksheet/tab to be of some interest). It's pretty much standard AIM with the exception that Portfolio Control is being updated by the prevailing rate of inflation each period (month).
Clive.
PS. In reflection of Lichello introducing AIM-HI (80/20 stock/cash) I called that 20/80 AIM-LO. Fundamentally it can yield the same total return as 100% Total Stock Market (TSM) over the mid to longer term, but subjectively i.e. only at certain times and where the interval between such times could be a decade or more. But if you're in for the longer term, potentially having 100% TSM comparable accumulation rewards at some future date whilst having only had 20% average stock exposure, 80% 'bonds' can have appeal to more risk adverse investors. No guarantees though, its conjecture on my behalf.
PPS ... good grief, 7+ years ago now (maybe longer) since I mentioned AIM-LO https://investorshub.advfn.com/boards/read_msg.aspx?message_id=88112382 Time flies - but that's a consequence of when you're 1 a year is a lifetime, but when you're 50 a year is just 2% of a lifetime, and I'm rapidly accelerating towards being a decade on the wrong side of 50 :(
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