Based on your feedback, we have been working on displaying investment projections in a way that is more intuitive to the average investor. Starting on July 27, 2017 we will be displaying portfolio projections without any adjustment for expected inflation.
Where will FutureAdvisor managed clients see this change?
This change is most visibly reflected in our dashboard. Below, we have included an illustrative example of which numbers you are likely to see change. This update will not affect how we are managing your assets, and no changes to your portfolio or their investments will be made as a result.
What will change for ‘Projected Total’?
Your projected portfolio value at retirement is changing from a real to a nominal value, meaning with inflation. This way, as you move towards retirement, your projected portfolio value over time is more likely to compare to your actual portfolio value. Simply put: the number that you see on your dashboard will be comparable to the number we believe you are likely to see in your account in the long-run.
What will change for ‘Projected Growth Rate’ & ‘Savings Rate’?
Similar to the Projected Total, your portfolio’s projected growth rate will now include inflation. This means that your projected growth rate will likely increase by approximately 2%. This is not due to a change in your investment recommendations or our outlook, it is simply the assumed inflation rate. This should make it easier to look at our projected investment returns and compare them to other investment options, as well as your actual returns after the fact. Because your savings rate is influenced by your expected growth rate, this change may also cause a small adjustment in your recommended savings rate.
What will change for ‘Income Projections’?
We will continue to provide your yearly income projections in today’s dollars. This allows you to better understand what retiring with that income would feel like today (i.e., purchasing power). As a reminder, our goal is to help you replace at least 80% of your current income, including future inflation, so that you can maintain your quality of life throughout retirement.
You can learn more about this update on our website by visiting our Methodologies and Assumptions page.
Disclaimer: The views expressed are for informational purposes only and are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. All expressions of opinion are subject to change without notice in reaction to shifting market, economic, or political conditions. The investment strategies mentioned are not personalized to your financial circumstances or investment objectives, and differences in account size, the timing of transactions and market conditions prevailing at the time of investment may lead to different results. Clients may lose money. Past performance is not indicative of future results. Investments in securities involve the risk of loss. Any tax strategies discussed should not be interpreted as tax advice and do not represent in any manner that the tax consequences detailed will be obtained. Clients should consult with their personal tax advisors regarding the tax consequences of investing. FutureAdvisor does not provide personalized financial planning to investors, such as estate, tax, or retirement planning.