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Investment

[expand title=”How should I allocate my assets?” trigclass=”noarrow” tag=”h3″]

  • Over 90 percent of investment returns are determined by how investors allocate their assets versus security selection, market timing and other factors.* Use this calculator to help determine your portfolio allocation based on your propensity for risk.* Source: Brinson, Singer, and Beebower, ‘Determinants of Portfolio Performance II: An Update,’ Financial Analysts Journal, May-June 1991

    Attitudes toward Risk
    1. What is your age?
    A) 35 years or under
    B) 36-54
    C) 55 or above

    2. What do you expect to be your next major expenditure?
    A) Buying a house
    B) Paying for a college education
    C) Capitalizing a new business
    D) Providing for retirement

    3. When do you expect to use most of the money you are now accumulating in your investments?
    A) At any time now…so a high level of liquidity is important
    B) Probably in the future…2-5 years from now
    C) In 6-10 years
    D) Probably in 11-20 or more years from now

    4. Over the next several years, you expect your annual income to:
    A) Stay about the same
    B) Grow moderately
    C) Grow substantially
    D) Decrease moderately
    E) Decrease substantially

    5. Due to a general market correction, one of your investments loses 14% of its value a short time after you buy it. What do you do?
    A) Sell the investment so you will not have to worry if it continues to decline
    B) Hold on to it and wait for it to climb back up
    C) Buy more of the same investment…because at the current lower price, it looks even better than when you bought it

    6. Which of these investing plans would you choose for your investment dollars?
    A) You would go for maximum diversity, dividing your portfolio among all available investments, including those ranging from highest return/greatest risk to lowest return/lowest risk
    B) You are concerned about too much diversification, so you would divide your portfolio among two investments with historically high rates of return and moderate risk
    C) You would put your investment dollars in the investment with the highest rate of return and most risk

    7. Assuming you are investing in a stock mutual fund, which one do you choose?
    A) A fund of companies that may make significant technological advances that are still selling at their low initial offering price
    B) A fund that only invests in established, well-known companies that have a potential for continued growth
    C) A fund devoted to highly diversified ‘blue chip’ stocks that pay dividends

    8. Assuming you are investing in only one bond, which bond do you choose?
    A) A high-yield (junk) bond that pays a higher interest rate than the other two bonds, but also gives you the least sense of security with regard to a possible default
    B) The bond of a well-established company that pays a rate of interest somewhere between the other two bonds
    C) A tax-free bond, since minimizing taxes is your primary investment objective

    9. You expect inflation to return and it has been suggested that you invest in ‘hard’ assets such as real estate and cable TV, which have historically outpaced inflation. Your only financial assets are long-term bonds. What do you do?
    A) Ignore the advice and hold on to the bonds
    B) Sell the bonds, putting half the proceeds in ‘hard’ assets and the other half in money market funds
    C) Sell the bonds and put all the proceeds in ‘hard’ assets
    D) Sell the bonds, put the proceeds in ‘hard’ assets, and borrow additional money so you can buy even more ‘hard’ assets

    10. You have just reached the $10,000 plateau on a TV game show. Now you must choose between quitting with the $10,000 in hand or betting the entire $10,000 in one of three alternative scenarios. Which do you choose?
    A) The $10,000 — you take the money and run
    B) A 50 percent chance of winning $50,000
    C) A 20 percent chance of winning $75,000
    D) A 5 percent chance of winning $100,000

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    [expand title=”Compare taxable versus tax-free investment return” trigclass=”noarrow” tag=”h3″]

  • Many investments are taxed differently. For example with bonds, some may be taxed federally only, some may be taxed at the state level only, and some may be taxed both at the state and federal level. Use this calculator to help make an apple-to-apple comparison of varying investment returns.

    Rates and Assumptions
    Before-tax return on savings (%)
    Federal marginal tax bracket (%)
    State marginal income tax bracket (%)
    Do you itemized deductions?

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    [expand title=”What is the value of a bond?” trigclass=”noarrow” tag=”h3″]

  • Bond values are very sensitive to market interest rates. For example, if you purchased bond with a stated/coupon rate of 10% and market rates had declined to 8% since you purchased the bond, then the value of your 10% bond in a market crediting 8% would be higher. Use this calculator to help determine the value of a bond.

    Bond Input and Assumptions
    Face amount on bond ($)
    Number of months to maturity
    Coupon rate (%)
    Today’s market rate (%)
    Desired yield to maturity (%)

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    [expand title=”What is the return on my real estate investment?” trigclass=”noarrow” tag=”h3″]

  • Purchase price, loan terms, appreciation rate, taxes, expenses and other factors must be considered when you evaluate a real estate investment. Use this calculator to help you determine your potential IRR (internal rate of return) on a property.

    Purchase
    Purchase price ($)
    Market Value (if different from Purchase price) ($)
    Cash invested ($)
    Depreciable value (%)
    Debt
    “Interest-Only” Loan? (Y/N)
    Loan amount (may include estimated Rehab) ($)
    Interest rate (%)
    Term (years)
    Closing costs ($)
    Income
    Gross rental income ($)
    Income frequency
    Annual rent increases (%)
    Occupancy Rate (%)
    Expenses
    Annual property tax ($)
    Annual insurance ($)
    Annual maintenance ($)
    Annual HOA ($)
    Annual increase in expenses (%)
    Other Information
    Duration of analysis (years)
    Realtor fees upon future sale (%)
    Annual appreciation rate (%)
    Marginal tax bracket (%)
    Long-term capital gains bracket (%)

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    [expand title=”What is the value of compound interest?” trigclass=”noarrow” tag=”h3″]

  • Compound interest can have a dramatic effect on the growth of an investment. Use this interest calculator to illustrate the impact of compound interest on the future value of an asset.

    Savings and Assumptions
    Initial balance or deposit ($)
    Annual savings amount ($)
    Annual increase in contributions (%)
    Number of years for the analysis
    Before-tax return on savings (%)

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    [expand title=”What is the value of a call or put option?” trigclass=”noarrow” tag=”h3″]

  • A Call option represents the right (but not the requirement) to purchase a set number of shares of stock at a pre-determined ‘strike price’ before the option reaches its expiration date. A call option is purchased in hopes that the underlying stock price will rise well above the strike price, at which point you may choose to exercise the option. Exercising a call option is the financial equivalent of simultaneously purchasing the shares at the strike price and immediately selling them at the now higher market price.A Put option represents the right (but not the requirement) to sell a set number of shares of stock (which you do not yet own) at a pre-determined ‘strike price’ before the option reaches its expiration date. A put option is purchased in hopes that the underlying stock price will drop well below the strike price, at which point you may choose to exercise the option.

    Call/Put Assumptions
    Analyze a Call or Put option?
    Total purchase price of option ($)
    Total number of shares controlled
    Strike price (per share) ($)
    Current price (per share) ($)

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    [expand title=”Taxable vs. tax-advantaged saving comparison” trigclass=”noarrow” tag=”h3″]

  • Taxable vs. tax-advantaged savings?

    Tax-deferral can have a dramatic effect on the growth of an investment. Use this calculator to determine the future value of an investment being subject to income tax each year versus deferring the tax until withdrawal.

    Savings And Assumptions
    Initial balance or deposit ($)
    Annual savings amount ($)
    Annual increase in contributions (%)
    Number of years for the analysis
    Before-tax return on savings (%)
    Marginal tax bracket (%)
    Compounding/savings frequency

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    [expand title=”What is my risk tolerance?” trigclass=”noarrow” tag=”h3″]

  • On your way home from work, do you drive in the slow lane or the fast lane? Each person has a different propensity for risk. When investing, this risk propensity can be used to determine the percentage of your portfolio that is exposed to equities. Complete the following questionnaire to help determine your risk profile.

    Attitudes toward Risk
    1. What is your age?
    A) 35 years or under
    B) 36-54
    C) 55 or above

    2. What do you expect to be your next major expenditure?
    A) Buying a house
    B) Paying for a college education
    C) Capitalizing a new business
    D) Providing for retirement

    3. When do you expect to use most of the money you are now accumulating in your investments?
    A) At any time now…so a high level of liquidity is important
    B) Probably in the future…2-5 years from now
    C) In 6-10 years
    D) Probably in 11-20 or more years from now

    4. Over the next several years, you expect your annual income to:
    A) Stay about the same
    B) Grow moderately
    C) Grow substantially
    D) Decrease moderately
    E) Decrease substantially

    5. Due to a general market correction, one of your investments loses 14% of its value a short time after you buy it. What do you do?
    A) Sell the investment so you will not have to worry if it continues to decline
    B) Hold on to it and wait for it to climb back up
    C) Buy more of the same investment…because at the current lower price, it looks even better than when you bought it

    6. Which of these investing plans would you choose for your investment dollars?
    A) You would go for maximum diversity, dividing your portfolio among all available investments, including those ranging from highest return/greatest risk to lowest return/lowest risk
    B) You are concerned about too much diversification, so you would divide your portfolio among two investments with historically high rates of return and moderate risk
    C) You would put your investment dollars in the investment with the highest rate of return and most risk

    7. Assuming you are investing in a stock, which one do you choose?
    A) Companies that may make significant technological advances that are still selling at their low initial offering price
    B) Established, well-known companies that have a potential for continued growth
    C) ‘Blue chip’ stocks that pay dividends

    8. Assuming you are investing in only one bond, which bond do you choose?
    A) A high-yield (junk) bond that pays a higher interest rate than the other two bonds, but also gives you the least sense of security with regard to a possible default
    B) The bond of a well-established company that pays a rate of interest somewhere between the other two bonds
    C) A tax-free bond, since minimizing taxes is your primary investment objective

    9. You expect inflation to return and it has been suggested that you invest in ‘hard’ assets, which have historically outpaced inflation. Your only financial assets are long-term bonds. What do you do?
    A) Ignore the advice and hold on to the bonds
    B) Sell the bonds, putting half the proceeds in ‘hard’ assets and the other half in money market funds
    C) Sell the bonds and put all the proceeds in ‘hard’ assets
    D) Sell the bonds, put the proceeds in ‘hard’ assets, and borrow additional money so you can buy even more ‘hard’ assets

    10. You have just reached the $10,000 plateau on a TV game show. Now you must choose between quitting with the $10,000 in hand or betting the entire $10,000 in one of three alternative scenarios. Which do you choose?
    A) The $10,000 — you take the money and run
    B) A 50 percent chance of winning $50,000
    C) A 20 percent chance of winning $75,000
    D) A 5 percent chance of winning $100,000

  • [/expand]
    [expand title=”What is the long-term impact of increased return?” trigclass=”noarrow” tag=”h3″]

  • It may surprise you how much more you could accumulate in savings simply by repositioning assets to achieve potentially a slightly higher return. Even one, two or three percent return over a short number of years can make a dramatic difference.

    Savings Information And Assumptions
    Current investment balance ($)
    Annual contributions ($)
    Number of years to project
    Before-tax return on savings (%)
    Marginal tax bracket (%)

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    [expand title=”Certificate of Deposit (CD) analyzer” trigclass=”noarrow” tag=”h3″]

  • Use this calculator to help determine the potential interest growth and tax liability on your Certificate of Deposit.

    CD Information and Assumptions
    Initial balance or deposit ($)
    Length of CD (months)
    Annual interest rate (%)
    Interest compounding frequency
    Marginal tax bracket (%)

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    [expand title=”What is the dividend yield on a stock?” trigclass=”noarrow” tag=”h3″]

  • Dividends paid by a corporation can make up a significant portion of the cash flow generated by a stock purchase. Use this calculator to help determine your pre-tax and after-tax yield on a particular stock.

    Stock Input and Assumptions
    Share price today ($)
    Number of shares owned
    Average quarterly dividend paid ($)
    Marginal tax bracket (%)

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    [expand title=”How do expenses impact mutual fund returns?” trigclass=”noarrow” tag=”h3″]

  • It may surprise you how sales charges, management fees and lost opportunity cost can erode the total return on your mutual fund. Use this calculator to estimate the impact these charges may have on the growth of your investment.

    Input and Assumptions
    Initial investment ($)
    Front-end sales charge (%)
    Back-end sales charge (if any) (%)
    Annual operating expenses (%)
    Other fees and commissions ($)
    Annual investment return (%)
    Number of years for the analysis

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