No Financial Planning Software or Calculator Can Predict the Future
No financial planning software and no investment growth calculator can predict the future
The future is simply not predictable, even with automated financial planning software.
A previous financial article, “The Solution – ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that investors are much better off with a well-considered financial plan. A stable set of financial beliefs can help you to keep focused and on track throughout your life.
The future is fundamentally unpredictable. The future of personal financial planning and investing is similarly unpredictable. Anyone claiming or implying that they can predict what will happen to investment returns in the securities markets in the future is just blowing smoke. If their predictive smoke claims to benefit you, then you should be suspicious.
Click here to get the details about Financial Planning Software
If you have to pay a lot of money to buy their predictions or financial advisor services, then you should be far more suspicious. When you have to push a lot of money across the table to pay some supposed seer, then that oracle is likely to win in the transaction, while you are likely to lose. (In itself, this is a probability-based prediction on our part. However, our prediction relies on one of the most consistent findings from the financial science literature, which is “the more you pay to play, the less you will keep from the investment securities markets.” (See our articles in these categories: Scientific Investing and Controlling Investment Costs)
Similarly, anyone who claims that he or she can assess probabilities about what will happen financially in the future is over-reaching at best. While probability assessments about the future may seem reassuring, they are just another method of blowing smoke. Because most individual investors are risk adverse, they naturally seek reassurances about their futures and their personal financial planning. Many are all too willing to listen to and pay dearly for seemingly authoritative pronouncements about probabilities related to the future. If someone tells you that his financial planning calculator method or investment growth calculator prediction has a certain probability associated with it, be very careful to understand the assumptions and methods used to develop this probability statement. The higher the prices of financial advisors’ services, the more questions you should ask.
Securities market prices reflect the collective efforts of all professional and individual investors to peer into the future. Historically, securities markets have paid risk premiums to investors only to bear market risks. Investment risk does not decline with the passage of time. It is always there. With investing, there can be no assurances, unfortunately. (See our articles in these three categories: Securities Valuation, Luck versus Skill, and Returns and Risk Premiums)
Too often, financial services companies give individuals advice about financial planning and investing that includes some razzle-dazzle about their supposedly superior analytic model, system, or tool. The general theme is usually the same: pay us and we will help you to beat the market using our unique insight developed from our special tool, model, system, etc. Unfortunately, these marvels are just more sophisticated forms of blowing marketing and sales smoke — this time aided by technological mirrors.
Go to Part 2 of 2 –>>
Tags: financial advisor services
Personal Financial Planning
- Build Investment Asset Buffers to Protect Yourself from Market Volatility (
Build Investment Asset Buffers to Protect Yourself from Market Volatility
You may be just as nervous as the next person is about investment risk. However, the coverage of your future expenses by your accumulated assets will determine whether you can actually manage, when risk really happens.
A previous article, "The Solution - ONLY follow financial strategies that [...])
- Insurable Risks Could Destroy Your Best Laid Financial Plans (
Do not ignore insurable risks that could destroy your best laid financial plans
A previous financial article, “The Solution - ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that investors are much better off with a well-considered financial plan. A stable set of financial beliefs [...])
- Financial Industry Product Development and Your Best Interests (
Financial research drives industry product development, but not necessarily toward the best interests of individuals
Personal financial decisions seem to have become very complicated. To add to the confusion, the financial services industry develops an unending array of supposedly innovative new products. However, a large part of the complexity that individuals face results from the proliferation [...])
- Two Examples of the Tax Assets Graphic in VeriPlan (Two examples of the Tax Assets graphic in VeriPlan
TAX ASSETS: Taxable and Tax-Advantaged Financial Assets (real $/yr)
Below are two examples of the blue-tabbed TAX ASSETS graphic, which come from VeriPlan's "Sue and Sam Saver" tutorial. This graphic separates their cash, bond, and stock assets by account taxability throughout their lifetime projections. Assets are separated [...])
- I Write to the President of CitiBank Customer Service (PIRATES OF THE CREDIT SEA -- Part 5: I write to the President of CitiBank Customer Service
My saga to recover my credit card treasure continues. Previous articles have covered the particulars of my situation, and I will not repeat them.
In summary, for fifteen years I have always done my best to conform to my AT&T [...])
- The Investment Returns You Lose to Investment Sales Loads (VeriPlan automatically tracks returns lost to investment sales loads
Many justifications for investment sales load charges might be offered by financial advisors during the sales process, but once a front-end load is charged, your diminished portfolio will 'forget' about the load charge for the rest of your life.
Loads become 'phantom' assets, which are rarely spoken of [...])
- Summary Table of Traditional IRA and Roth IRA Tax Rules (Summary Table of Traditional IRA and Roth IRA Tax Rules
For your convenience, The Skilled Investor has provided a detailed table that summarizes 2007 rules for traditional IRAs and Roth IRAs.
Because this table has 13 columns and 20 rows, it is too large to be displayed properly in a blog posting. To view this table and [...])
- Dodge and Cox Stock Fund (DODGX) picks up a +8 Fund Authority Score (The table below in this article presents The Skilled Investor's Fund Authority Score and other information for the Dodge and Cox Stock Fund (DODGX).
The diversified investment fund strategy of the Dodge and Cox Stock mutual fund (DODGX)
According to its website and its prospectus filing on the U.S. Securities and Exchange Commission EDGAR system, the investment [...])
- How Investment Securities Are Valued – Snapshots in Time (
Snapshots in time - How investment securities are valued
Every securities market transaction requires a buyer and seller with differing viewpoints.
Markets can operate, because there are differences between investors in their assessments of the intrinsic value and risk of securities.
Current investment values vary in the eyes of the many beholders of investment market securities. Knowledgeable participants [...])
- The Biggest Personal Finance Story of the Past 30 Years (
The Biggest Personal Finance Story of the Past 30 Years - Part 1
What could the biggest personal finance story of three decades be?
The growth of mutual funds and ETFs? Nope.
The dot com boom and bust? Nope.
Vanishing pensions? Nope.
The not-so-high quality of mortgage bonds? Nope.
A 0% personal savings rate nationally? [...])
- Choose Sufficiently Mature Mutual Funds and ETFs (Choose sufficiently mature mutual funds and ETFs
Investing in more mature equity and bond mutual funds and exhanged-traded funds (ETFs) allows you to evaluate the historical consistency of a fund's record.
On average, the future portfolio returns of more mature funds are probably no more predictable than for very young funds with a similar style or strategy. [...])
- When to Take Social Security Retirement Benefits (When to Take Social Security Retirement Benefits?
Concerning when to take Social Security retirement benefits, the Boston College Center for Retirement Research has some research in their publications section that addresses this subject. In particular, see "SHOULD WE RAISE SOCIAL SECURITY’S EARLIEST ELIGIBILITY AGE" by Alicia H. Munnell, Kevin B. Meme, Natalia A. Jivan, and Kevin [...])
- Time Spent on the Wrong Financial Activities Is Bad for You (
Spending your valuable time on the wrong financial activities is just plain bad for you
A previous article, “The Solution - ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that individuals are much better off with a well-considered financial viewpoint. This follow-up article discusses the [...])
- State Street Global Advisors S&P 500 Index Fund (SVSPX) wins the Best +10 Fund Authority Score (The table below in this article presents The Skilled Investor's Fund Authority Score and other information for the SSgA S & P 500 Index Fund (SVSPX). The Skilled Investor has also published an article about lower cost S&P 500 index mutual funds that you can read, which is entitled: Low Cost S&P 500 Index Mutual [...])
- The Quality and Cost of Advice Paid by Investment Sales Loads – Part 2 (
Can you really get free and objective investment advice, when you pay investment sales loads? (Part 2 of 2)
Excessive investment costs and investment expenses are a plague on your lifetime personal financial planning.
Excessive investment expenses are one of the most significant barriers to lifelong family financial security. While financial services industry sales people tell you [...])
Comments are closed.