Instructions for the Standard Programs
· The Standard Financial Planning Program
· The Standard Retirement Planning Program

Descriptions of the Advanced programs
· Advanced Financial Planning and Retirement Planning Programs
· Survivor Planning program
· Portfolio Planning Programs

The Standard Financial Program
The Standard Financial Planning Program is designed for rapid analysis. It requires limited input, while still allowing you to project the finances you’ll have at the age you select based on the information you enter. For example, this program tells you how much you’ll have at age 65 if you are now 30 or 40 years old.

Instructions:
1. Enter your present age

2. Enter an age in the future (e.g, 65)

3. Enter your Total Liquid Resources. Include cash, stocks, bonds, and other resources that can be readily converted to cash. (Do not include Real Estate, the value of your home, autos.)

4. Enter your Total Annual Inflow. Include salary, commissions, and disability benefits if any. (Do not include interest or dividends from investments.)

5. Enter your Total Annual Outflow. This would be all you spend to live.

Hint
If you feel as if you’re just breaking even, or close to it, every year, make sure your Annual Outflow entry is equal to the Annual Inflow. Once the analysis is complete, you can always go back and decrease the outflow information to see what you would have if you could save a little each year.

6. Enter a Rate of Inflation: (Currently many analysts use 3%.)

7, 8 . Enter Allocation percentages for bonds, stocks.
Allocation refers to how your portfolio (total investments) is divided.

Guidelines for selecting Allocation percentages
 BondsStocks
Under 55 years old; need growth to maximize size of portfolio30%70%
55 to 65 years old; need balance50%50%
Over 65 years old; more interested in safety than growth70%30%


Bonds tend to be more stable, fluctuate less in value but do not increase in value as quickly as Stocks. Stocks however provide the growth needed in earlier years to build a portfolio.

Suggested Allocations can be developed by using the Risk Tolerance Worksheet in the Advanced Financial Planning Program.

A Stockbroker or Financial Advisor would offer advice on this topic.

You could test the 50%/50% combination and change it to view different results.

9. Enter your current Tax Rate.

10 & 11. Enter a return percentage for bonds and stocks. This is what you hope to make on an annual basis on your investments. You can enter the suggested amounts or others you feel appropriate. The program will adjust for taxes based on the tax rate you enter.

Guidelines for Selecting Returns
 BondsStocks
Conservative approach to investing3.0%6.0%
Neutral approach to investing4.0%8.0%
Aggressive approach to investing5.0%10.0%


Investments with high returns tend to be more risky i.e. chance of decreasing in value is greater. Lower returns provide greater safety but less growth.

Remember returns are subject to taxes, unless invested in nontaxable issues (e.g. Municipal Bonds) so that returns will be reduced by your tax rate. Returns on nontaxable investments tend to be lower to begin with and move toward taxable returns adjusted for tax rates.

A Stockbroker or Financial Advisor would offer advice on this topic. You could test the combination used in the example and make changes to view different combinations.

Based on the information you entered the program will calculate what your Total Resources will be at the age you initially chose.

Save this information and reenter data you want to change. The program will recalculate the results based on the new input.

The Standard Retirement Planning Program
The Standard Retirement Planning Program is designed for rapid type analysis. It requires limited input on your part. The program will calculate how long your funds will last based on the assumptions you enter.

Hint:
Use this program to determine how long your funds will last. When you are satisfied with the results, go to the Standard or Advanced Financial Planning programs to plan for providing the resources needed to obtain desired results.

Instructions:
1. Enter your present age.

2. Enter the age you intend to retire.

3. Enter how much you think you will have when you retire (Total Liquid Resources; things like Cash, Stocks, Bonds, all those things that can be readily turned into cash). Do not include Real Estate the value of your home, autos. Treat this number as a broad estimate. Use round figures. You can test different numbers until you get the desired results.

4. Enter a Total Annual Inflow as if you were to retire now; Salary, Commissions, Disability Benefits if any. Do not include interest or dividends from investments. For example: enter your Social Security Benefits as if you were retiring now.

5. Enter a Total Annual Outflow. Again pretend you are retiring now and estimate how much you will be spending. Include taxes.

The program will adjust the Inflow, Outflow information entered for inflation by considering your present age, the inflation rate you chose, the planned retirement age and will continue to adjust for inflation through the retirement years

6. Enter a Rate of Inflation. Many people are using 3%.

7. Enter an allocation % for Bonds and Stocks.

Guidelines for selecting Allocation percentages
Bonds tend to be more stable, fluctuate less in value but do not increase in value as quickly as Stocks. Stocks however provide the growth needed to keep up with inflation. In retirement Stock brokers and Financial Advisors usually recommend a combination slanted torward Bonds Suggested Allocations can be developed by using the Risk Tolerance Worksheet in the Advanced Retirement Planning Program you could test the combination used in the example and make changes to view different combinations.

8. Enter a Tax Rate. This can be your current tax rate or the tax rate you think you will have at retirement. In some cases the retirement tax rate could be lower that the current rate.

9&10. Enter a return percentage for bonds and stocks. This is what you hope to make on an annual basis on your investments. You can enter the suggested amounts or others you feel appropriate. The program will adjust for taxes based on the tax rate you enter.

Guidelines for Selecting Returns
 BondsStocks
Conservative approach to investing3.0%6.0%
Neutral approach to investing4.0%8.0%
Aggressive approach to investing5.0%10.0%


Investments with high returns tend to be more risky i.e. chance of decreasing in value is greater. Lower returns provide greater safety but less growth. People tend to take fewer risks in retirement. A Stockbroker or Financial Advisor would offer advice on this topic. You could test the combination used in the example and make changes to view different combinations that may better achieve your objectives.
Remember returns are subject to taxes, unless invested in nontaxable issues (e.g. Municipal Bonds) so that returns will be reduced by your tax rate. Returns on nontaxable investments tend to be lower to begin with and move toward taxable returns adjusted for tax rates.

Based on the information you entered the program will calculate how long the combination of starting resources, inflow will cover outflow and at what age the combination begins to become deficient.

Save this information and enter information you want to change. The program will recalculate the results based on the new input.

Descriptions of the Advanced programs

Advanced Financial Planning and Retirement Planning Programs
Request these free programs to enter more detailed personal information about your earning and spending. They also provide for more detailed portfolio allocation

The Survivor Planning Program
The Survivor Program is a version of the Advanced Retirement Planning Program modified to test how your present resources could support your heir(s). It allows for very detailed information.

Portfolio Planning Programs
Many financial advisors advocate diversification of portfolio investments. The programs allow you to display the diversification of your Portfolio for Bond and Stock Categories. For the diversification analysis the style investment identification of each investment is needed. The program uses the Morningstar Style Box concept. This information is readily available from the investment facility offering the investment, Financial Investment advisory services, or a Broker or Financial Consultant.

For Example The Mutual Fund Harbor Bond is classified as High in Quality and Intermediate as to Duration or identified as HI. When the Style Information is entered in the Worksheets a pie chart showing diversification is displayed in the Results section. The programs also allows you to test the performance of a portfolio over a period of time (10 years) using an Annualized rate of return of each investment.

Again this information is readily available from the investment facility offering the investment, Financial Investment advisory services, or a Broker or Financial Consultant. When the Annualized Rates of Return are entered in the Worksheets the programs calculate the value of the portfolio after a ten-year period and displays it in the Results section. You can also compare the performance of your portfolio to a Benchmark of your choice (e.g. LB Aggregate, Sp 500 Index) by entering the Annualized Rates of Return for the Benchmarks.

Caution: There is no assurance the investments will produce the same results in the future. It is only a test of backdated information. The investments in the Bond and Stock portion of the portfolio can be divided equally or assigned specific dollar values.

For Example: Three investments in a $17,500 Bond portfolio can be spread out equally at $5833 for each investment or Customized, assigned dollar values of $5000,$5000,$7500.

Most Financial services organizations offer this type of information with very little input from the investor. If you have the time and background you can work the programs yourself. Or if you are using a Broker or Financial Advisor ask them to enter the necessary information and view the results.

To begin, Click on Portfolio Planning Programs
The program asks for the dollar value of the total portfolio (total resources), and an allocation percentage for Bonds, Stocks.

For an equal investment approach use the Selections Worksheet Equal Investment
If you wish to compare the portfolio performance to a Benchmark enter the Benchmark Annualized Rate of Return.

To view the results, click on Analysis Results Equal Investment

For a customized investment approach, use the Selections Worksheet Custom Investment
If you wish to compare the portfolio performance to a Benchmark enter the Benchmark Annualized Rate of Return

To view the results click on Analysis Results Custom Investment