The first place you will encounter asset projections in BodesWell is in the onboarding, when we ask you to enter your cash, your investment assets and your retirement assets.
Whether you link your investment accounts directly, or leave them as you entered them when you first started BodesWell, to create your financial plan, we have to estimate the future value of your assets. This article covers how we do so for nine different investment asset types.
If you link your investment accounts, we are able to project future value based on the historical performance of each particular position. This provides increased accuracy of your plan and automatic updates on asset values. Except for the onboarding process, if you manually enter an investment, you must choose its asset type.
The current options are:
We use FinMason (www.finmason.com), which determines the approach for estimating the future value of each of these asset types based on a Monte Carlo analysis. Monte Carlo simulations regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The simulations are based on assumptions and there can be no assurance that the results shown will be achieved or sustained. Actual results will vary, and such results may be better or worse than the simulated scenarios. You should be aware that the potential for loss (or gain) may be greater than demonstrated in the simulations.
For Real Estate, we use the proxy ticker symbol VNQ, the largest real estate ETF on the market. We get historic asset class performance on VNQ from FinMason. If you enter real estate assets during onboarding, we use this ticker symbol to project the future value of that asset with the FinMason Monte Carlo model.
If you have a cash asset like checking or savings accounts or cash accounts held by brokerage firms, we rely on a cash asset class from FinMason that attempts to model the future appreciation or depreciation of holding cash. If you enter cash assets during onboarding step 4 ("Add your savings and investments"), we use this FinMason model to approximate your future cash holdings.
For Private Stock and Collectables, we don't automatically project growth in these investments. Because the market for these investments is so small, specialized and volatile, we simply hold these assets at the cash value you enter. You can later realize any appreciated value when selling those items with the "Windfall" event.
For any public stocks, mutual funds, retirement funds or bond funds with ticker symbols, we project growth from that ticker symbol using FinMason as mentioned above.
If we don't have a ticker symbol for a bond or debt instrument, we use the ticker BND, which is Vanguard's Total Bond Market index fund ETF.
We use the ticker symbol VTI, which is Vanguard's Total Stock Market Index ETF, if you manually add:
(1) an asset (with or without a ticker symbol) and categorize it as "Other", or
(2) a non-cash investment for which we don't have a ticker symbol (for example, "401k")
During onboarding, if you manually entered investment assets (e.g., a brokerage or online trading account) or retirement assets (e.g., 401K or IRA), we use VTI to project the potential future value of the investment assets and retirement assets that you manually entered.