Assumptions and Methodology

The Portfolio Monitor service is intended to model your financial holdings, do calculations of various metrics, project your investments into the future using industry standard conventions, and monitor the total holdings conveniently by updating stock values with information from the stock market. This application does not give specific advice, and it highly recommends that you work with a professional financial advisor.

The application enables multiple profiles which work independently, and let you model a few variations. Each profile contains configuration settings that control the overall analysis, as well as allowing you to input and update a description of your accounts and their asset holdings, debts, income and expenses. Each of these quantities have a variable length list so you are not restricted in how well you define these. Also these allow you to define time ranges on the values so that it gives the application a realistic view over your expected lifetime.

The configuration settings profile some basic information about the clients, so that the summary report can be readible, but also some information about the age and desired retirement date is used in the calculations. Other settings include asset allocation goals which a easily modified by the user, portfolio and inflation growth assumptions which are also easily modified by the user, and other settings such as asset class growth rates and expense inflation rates which are used in calculations to issue warnings.

The Accounts is a list of each bank, investment and retirement account that you hold, as well as other things such as real estate you may own or such. No personal sensitive information is needed here, just a short description of the account name. Each account holds a list of asset holdings such as stocks, mutual funds, or other holdings that may be manually entered.

The Debts can also be listed. These are used in some calculations of asset to debt ratios and net worth.

The Income is a list of income sources which is used for cash flow and expense analysis.

The Expenses is a list of your living expenses and are particularly important in determining your expected cost of living over the remainder of your lifetime and are very important in projecting your investiment values into the future.

The Analysis page provides a net worth-like statement for easy readibility. The report can be used to organize your information before a visit to your financial advisor and also it is a uniform way to keep a historical record of how you are doing on your investiments and look back to compare one year over another year, so you can make decisions about your financial future. It contains many statistics calculations and graphs. The analysis also makes several estimates of quanities like taxes or capital gains distributions. The assumptions used to make these may not be adequate for all situations. You can adjust the effective tax estimate calculation in the expenses panel.