Overview

ASSET ALLOCATION MODEL WITH REALISTIC PROJECTIONS OF FINANCIAL SITUATION AT RETIREMENT AND CALCULATION OF RESOURCES NEEDED FROM THEN ON. Supporting up to 32 currencies. Fully editable version available, with investment suggestions.

This model helps finalize a sound investment strategy to meet the ultimate goal of a stress-free life in retirement, while suggesting specific investments you can even execute directly through your home banking, saving money on commissions.

This is primarily achieved by:
• establishing an adequate asset allocation methodology based on age and current net worth;
• projecting your current saving capacity, estimating how earnings, operating and capital expenditures might evolve in your lifespan.

For this purpose, the model uses a set of built-in assumptions:

  • average return of equity, bonds and real estate portfolios, based on last 10 years performance of relevant benchmark indexes;
  • expected inflation development, based on last 10 years history;
  • age at which earnings and expenses are expected to peak (based on broad statistical data);
  • estimated evolution of capital expenditures;
  • estimated capital gains tax;
  • estimated life expectancy.

The allocation process:
1.determination of investable assets
2.creation of an emergency fund (kept in checking and savings accounts) equal toannual expenses plus proportional margin
3.determination of expected cash requirements for next 5 years, to be invested in safer instruments with maturities matching future disbursements
4.allocation of the remaining funds to higher-risk instruments (Equities, Bonds, Real Estate)

Altogether, the model incorporates 3 key functionalities, each one generating a specific  asset allocation proposal:

  • PORTFOLIO STRUCTURING plus REBALANCING (main feature)
  • LUMP-SUM INVESTMENT (excess liquidity invested all in one go)
  • ACCUMULATION PLAN (younger people, lower net worth, periodically investing the same amount)

 

Full explanation of terminology used provided in the Glossary sheet.

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