No financial planning software and no investment growth calculator can predict the future – Part 2
The future in not predictable, even with automated financial planning software.
The future is fundamentally not predictable. The future of personal financial planning and investing is similarly unpredictable. The Skilled Investor’s approach with VeriPlan is different. As a lifetime financial planning and investment modeling tool, VeriPlan fully embraces the uncertainty of the future. VeriPlan is an automated and fully customizable decision support tool for lifetime personal financial planning decisions. VeriPlan makes no claims whatsoever to be predictive. VeriPlan is not a crystal ball. You should not develop any false comfort that you can predict the future by yourself, nor should you expect that VeriPlan can predict what will happen. (See these articles: Executive Summary of VeriPlan and VeriPlan’s 10 Financial Planning Tools and Financial Calculators)
VeriPlan is a sophisticated and individually customizable do-it-yourself financial planning spreadsheet software product. Developed at the outset to serve as a personal decision application for advisory clients, almost a decade ago a standalone configuration of VeriPlan was released, which home users could use themselves. It has been enhanced and updated every year since then.
The VeriPlan financial planning software for individuals is now the most automated and personally customizable home personal financial planning software which is available on the market — for much less than the price of competitors’ financial planning software applications.
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VeriPlan intentionally avoids any assessment of probabilities about the future. Instead, based on your inputs and assumptions, VeriPlan projects internally consistent scenarios about your particular financial and investment affairs projected across your lifetime. VeriPlan’s future value calculator functionality automatically projects these hypothetical illustrations based on the very long-term historical securities market trend lines. To understand their impacts, you can adjust to these historical rates of return, as you wish. (See this article: What have average investment asset class risk premiums been over long periods?)
VeriPlan creates fully customizable projections that model your particular financial affairs and your financial planning intentions about the future. VeriPlan’s personal financial planning software incorporates your potential earnings, expenses, savings, debts, and investment growth. VeriPlan’s future value calculator incorporates the historical market risk premiums that have been paid on various asset classes, plus current federal taxes, state taxes, and local tax rates and limits. VeriPlan’s lifetime cash flow analysis capabilities automatically develop a customized series of annual net worth projections for you. These net worth projections also automatically reflect the impacts of your investment taxes and your investment costs. (See: VeriPlan Overview 4 — Your investment portfolio assets in VeriPlan)
VeriPlan’s embedded documentation details how VeriPlan develops your customized lifetime projections. VeriPlan allows you change any assumption and to adjust return on investment rates both scientifically and arbitrarily so that you can analyze a wide range of more pessimistic and more optimistic projection scenarios. VeriPlan’s fully automated scenario planning capability helps you to evaluate how you might manage over the long term, if the future were to deviate substantially from the long-term historical trend.
Despite VeriPlan’s extensive features, the bottom line is that you cannot, VeriPlan cannot, and no other tool can predict the future. Measuring your current financial situation and using your financial planning inputs, every VeriPlan projection provides 21 standard graphics that summarize and illustrate key financial planning metrics through age 100. However, you should not get too enamored with any of VeriPlan’s graphics regarding your future financial affairs.
VeriPlan’s graphical scenarios can be useful to your thinking and planning. Nevertheless, they cannot and do not provide a map into the future for you. Throughout your life, the ongoing financial decisions that you make as your financial circumstances change is the only way that you can actually know your personal financial map.
You can prepare for the future, but not predict it. As an evolving toolkit, VeriPlan can help you to role-play about what you may need to do in the present to get to your future goals. For most people, VeriPlan will act as a wake up call, because most people have not done enough to plan financially for their futures.
VeriPlan Is Simply the
Best Financial Planning Software for Individuals
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Tags: risk premium
Personal Financial Planning
- Analyze Multiple Personal Financial Planning Decisions Simultaneously with VeriPlan (VeriPlan allows you to analyze multiple personal financial decisions simultaneously
Personal financial and investment decisions are complex, because so many different factors are in play simultaneously. When an integrated financial software application like VeriPlan is developed by people who understand scientific financial projection methods, all these different factors can be measured and automated on a modern [...])
- Choose Lower Mutual Fund and ETF Management Fees (Choose mutual funds and ETFs with MUCH LOWER investment management expenses
Investment fund management fees can only be justified by individual investors, if higher net returns more than compensate for these fees. Sadly, this is most often not the case with actively managed equity and bond mutual funds and exchange-traded funds (ETFs). In addition, you have [...])
- Understand the Confusing Securities Market Motion Picture (
Securities markets are usually very quick to adjust prices to reflect new information. However, this price adjustment process may take longer and be more volatile, if the new information is ambiguous.
At any point in time, market participants will already have used more or less rigorous valuation methods to judge their expected risk-adjusted value of securities. [...])
- Make More Optimal Tradeoffs Between Investment Risk and Return (VeriPlan helps you make more optimal decisions about the tradeoffs between investment risk, investment return, and personal savings
Too often decisions about risk-adjusted investing and asset allocation are over-simplified with a few questions about your risk tolerance. Typically, this superficial process will be followed quickly by the offer of a canned, off-the-shelf asset allocation scheme and [...])
- Determine the Savings You Need for Your Lifetime Financial Goals (You cannot invest without savings. How much savings are enough? ... too little? ... too much?
Currently, the U.S. is experiencing a savings crisis. The net personal savings rate is zero or slightly negative, despite a healthy and growing economy. This situation is a prescription for millions upon millions of future personal financial disasters. (See: [...])
- Never Invest Solely Because of Superior Past Investment Fund Performance (
Never invest solely because of superior past mutual fund or ETF performance
Superior past fund performance does NOT predict superior future performance.
Summary: 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 [...])
- Set your personal savings and other financial goals – Step 2 of 10 Financial Planning Steps in the Right Direction (CLICK HERE TO READ THE SKILLED INVESTOR's OTHER ARTICLES ABOUT THESE "10 FINANCIAL PLANNING STEPS IN THE RIGHT DIRECTION."
The single most significant financial lever that individuals control directly is their management of personal expenditures. The second is their lifetime effort to obtain sufficient income. Most people simply do not save enough of their current income [...])
- Always Completely Diversify Your Investment Portfolio (Complete portfolio diversification is always a better idea.
On average, the securities markets will not pay you to hold any skewed subset of the overall market. Doing so is just a gamble that may or may not pay off. You should not expect to be paid any more for the added risk and anxiety.
A previous article, [...])
- Pay Lower Investment Expenses To Get Higher Investment Returns (
Pay Lower Investment Expenses To Get Higher Investment Returns - Part 1
Excessive investment costs are a plague on your 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 that you need to pay more to get more, the correct [...])
- Can you really beat the stock market? (
You are not likely to beat the stock market, despite all the cheer leading from the securities industry and the financial media.
When you try to beat the public securities markets, unfortunately you are more likely to trail the market’s return, because of extra costs, taxes, and investment mistakes.
The idea that investors can beat the market [...])
- The Most Important Determinants of Your Lifetime Wealth (
Your personal earnings, expenditures, and savings are the most important determinants of your family’s long-term financial wealth
Summary: How much you earn, spend, and save are by far the most dominant determinants of your long-term financial well-being. Self-control in your decision-making regarding consumption is far more important than clever investing. Expenditure control works, while attempts [...])
- A Financial Decision Tool That Becomes Increasingly Valuable Over Time (As a financial decision tool, VeriPlan becomes increasingly valuable with the passage of time
Summary: While VeriPlan is an genuine bargain because of its low cost, it is an even greater bargain, when you consider that VeriPlan has no built-in obsolescence and that it can be used productively for years. We have engineered VeriPlan, so that [...])
- Advisor Costs and Strategies Determine Your Return on their Services (Financial advisor costs and the value of their investment strategies determine your return on investment from these investment advisor services
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 [...])
- Fidelity Spartan 500 Index mutual fund (FSMKX) achieves the Best +10 Fund Authority Score (
The Standard & Poors 500 stock index is the most common equity index fund benchmark in the U.S. The S and P 500 tracks about 75% of publicly traded U.S. equity market asset value. The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 [...])
- The Birth of Yet Another Darn Asset Class – Infrastructure (The Birth of Yet Another Darn "Asset Class" - "Infrastructure"
Recently, The Skilled Investor published two articles:
The first article discussed how the financial industry keeps manufacturing new asset classes for brokers and investment advisors to sell to individual investors. The Skilled Investor raised the question of whether these new asset classes are likely to serve the [...])