You can think of
So, how do you add an Account? I'm glad you asked.
First, log in to your Real Estate Financial Planner™.
Click on the link for Accounts from the drop down menu under Planner™ across the top of the page.
See Pricing for more details.
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
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
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
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
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”.
When Do You Want To Add The Account?
You will want to have some
However, there are some
Use Date Opened to tell the Real Estate Financial Planner™ software when this Account should show up in your
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
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
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
You can use Rules to adjust this Yearly Rate of Return over the course of the
Once you save what you entered above, you have successfully created an Account.
Here are some additional best practices for setting up
- 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
Accountstylized text with icon when referencing an account so you really don't need to use the word “Account” when naming your Accountsin the software.
- Accuracy Matters, But Just To a Point – If you're actively using these
Accountsin 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. AccountsAre Reusable Across Multiple Scenarios– While you can choose to use different Accountsin different Scenariosyou create, in many cases you'll choose to use the same Accountacross multiple Scenarios.
The following are additional blog posts related to
- Default Cash Account
- How to Link an Account to a Rule
- How to Link an Account to a Property
- How to Create a Copy of an Account
- How to Remove an Account from a Scenario
Adding To Scenarios
Want to read other blog posts that relate to adding