How to Add an Account

Accounts are used as part of a Scenario to store money and, optionally, earn a return on the money in the Account.

You can think of Accounts as a fancy way of saying “buckets” for holding money.

So, how do you add an Account? I’m glad you asked.

Step #1

First, log in to your Real Estate Financial Planner™.

Step #2

Click on the link for Accounts from the drop down menu under Planner™ across the top of the page.

Step #3

From the Accounts page click on the Add New Account button.

IMPORTANT NOTE: If you have more

Accounts than your plan limit, you’ll need to delete one or more

Accounts before being able to add a new one.

Premium users have higher limits to the number of

Scenarios,

Accounts,

Properties, and

Rules that they can add.

See Pricing for more details.

Account Inputs

Now that you’ve created a new Account, there is some basic information you should enter about your Account so you know how to identify it on Charts, when you’re modifying things with Rules.

Name Your Account

You may need to identify this Account from a list of all your Accounts so create a new name for your Account that will make it easily identifiable.

Here are a few examples that might be helpful, but you’re encouraged to use whatever naming strategies make sense for you.

Stock Market Investment Accounts

If you’re going to use an Account to hold the money that you’re investing in growth stocks you may want to name it “Stock Market – Growth Stocks”. Then, you can set the Yearly Rate of Return for that particular account to model the returns you might expect to see in growth stocks.

If you have a second account that you’re using to invest in index funds, you might name that Account “Stock Market – Index Fund” and set the Yearly Rate of Return to match what your expectations are for index funds.

You can use Rules to move money between Accounts.

Savings Accounts

In some cases, you may choose to model having your reserves and/or your emergency fund in a savings account that has different earning characteristics than a more aggressively invested Account like one that is invested in stocks.

If so, you may want to name that account “Savings – Emergency Fund” and use Rules to keep that Account at a specific level at all times and put the remainder into other, more aggressively invested Accounts.

Retirement Accounts

Retirement accounts can have specific limitations on them. They may limit how you can contribute to them. They may limit how you can invest them. They may limit when and how much you can withdraw from them. You can create separate Accounts to model these and name them appropriately.

For example, you might name a retirement account you have as “IRA – Tammy” or “401K – Brian”. Or, maybe you have or will eventually inherit a retirement account. You might name that “Inherited IRA – Dad”.

IMPORTANT NOTE: What you name your

Account has no impact on how the

Account acts. It is up to you to set up your

Rules to accommodate the restrictions on the

Account. In other words, naming an

Account with “IRA” does not restrict what you can do with the

Account in our system. It is up to you to impose that logic with

Rules.

When Do You Want To Add The Account?

You will want to have some Accounts from the very beginning of your Scenario and keep them for the entire Scenario. For example, an emergency fund or savings account.

However, there are some Accounts that you may want to “show up” in your Scenario later. For example, you may want your father’s inherited IRA to show up 10 years in the future.

Use Date Opened to tell the Real Estate Financial Planner™ software when this Account should show up in your Scenario.

Default Cash Account

Every Scenario must have at least one Account because the Real Estate Financial Planner™ software needs to know where to keep track of money for the Scenario. You don’t need to worry about it though… every Scenario automatically has a Default Cash Account.

The Default Cash Account is special. It is the only Account that can have a negative balance. A negative balance means that you need to add money from outside the Scenario.

The Default Cash Account, by definition, earns 0% return. Think of it as money under your mattress or in the shoe-box in your closet.

The Default Cash Account is always included in your Scenario and cannot be removed. You don’t ever need to create the Default Cash Account.

Learn more about the Default Cash Account.

How Much Are You Starting With?

Next, enter in the Opening Balance for the Account. This is the amount in the Account on the Date Opened.

How Much Is The Account Earning?

Finally, what is your expected Yearly Rate of Return for the money that you have in the Account?

This is the compounding rate of return for this Account for the entire year. By that, I mean that the Real Estate Financial Planner™ software does approximately 1/12th of that return on your monthly balance each month that it does its calculations. The Real Estate Financial Planner™ software actually calculates what the monthly return would need to be to make sure your return is exactly the Yearly Rate of Return that you enter here.

This is the starting Yearly Rate of Return. What if you want to have a variable Yearly Rate of Return, or change the Yearly Rate of Return later in the Scenario?

You can use Rules to adjust this Yearly Rate of Return over the course of the Scenario. For example, using Rules we can model this return to be a random distribution curve that models the returns you might get in the stock market. Or, say you get a return on a CD for 3 years and then the Yearly Rate of Return changes; you can use Rules to adjust this Yearly Rate of Return later.

Once you save what you entered above, you have successfully created an Account.

Best Practices

Here are some additional best practices for setting up Accounts:

Do not use your actual account numbers for naming your Accounts. While the Real Estate Financial Planner™ software uses banking-level encryption, why add extra risk by putting your real banking account numbers out on the web in an additional spot on the web.
Be brief, but descriptive. “My Retirement Account” is OK. “Joe’s Roth 401K” is better. We do try to use the Account stylized text with icon when referencing an account so you really don’t need to use the word “Account” when naming your Accounts in the software.
Accuracy Matters, But Just To a Point – If you’re actively using these Accounts in real life the balance of them is going to vary. You’re never going to get the balances of these exactly right. Plus, in most cases the returns you’re getting on them is never going to be exactly what you entered. So, to think that you’re off by a few hundred dollars is going to make a difference is letting your control-freakiness show a little too much (this is coming from one control-freak to another). Heck, for certain folks, you can be off by a a lot more than a few hundred dollars and that would be eaten up by noise in your returns and modeling. So, chillax about accuracy… especially with starting balances. You can always come back later and update the starting balance and re-run it… that’s what you should be doing anyway.
Accounts Are Reusable Across Multiple Scenarios – While you can choose to use different Accounts in different Scenarios you create, in many cases you’ll choose to use the same Account across multiple Scenarios.

Accounts

The following are additional blog posts related to Accounts for your reading pleasure.

Adding To Scenarios

Want to read other blog posts that relate to adding Accounts, Properties, Rules to Scenarios? Here are a few blog posts about that.