Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
  • Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)
Originally published: 01/06/2020 12:13
Last version published: 12/02/2021 08:29
Publication number: ELQ-15219-9
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Asset Allocation & Retirement Planning Model 2021 (PROTECTED VERSION)

Asset allocation model with realistic projections of financial situation at retirement and resources needed from then on

Description
This model helps finalise a sound investment strategy to meet the ultimate goal of a stress-free life in retirement, while suggesting specific investments you can directly execute through your home banking, saving money on fees. Up to 32 currencies supported. Fully editable version also available.

This is primarily achieved by:
• establishing an adequate asset allocation methodology based on age and current net worth;
• projecting your current saving capacity, estimating how earnings, operating and capital expenditures will evolve during your lifespan, using built-in assumptions;

For this purpose, the model uses a set of built-in assumptions:
• average return of equity, bonds and real estate portfolios, based on last 10 years performance of relevant benchmark indexes;
• expected inflation development, based on last 10 years history;
• age at which earnings and expenses are expected to peak (based on broad statistical data);
• estimated evolution of capital expenditures (calculated by default, if no specific input provided)
• estimated capital gains tax (average based on Country of investor);
• estimated life expectancy

Financial projections also available on net present value basis.

The allocation process:
1.determining investable assets
2.creation of emergency fund (kept in checking and savings accounts) equal to your annual expenses plus a proportional margin
3.determining expected cash requirements for next 5 years, to be invested in safer instruments with maturities matching your future disbursements
4.allocation of remaining funds to higher-risk instruments (Equities, Bonds, Real Estate)

Altogether, the model incorporates 3 key functionalities, each one generating a specific asset allocation proposal:
• PORTFOLIO STRUCTURING plus REBALANCING (main feature)
• LUMP-SUM INVESTMENT (excess liquidity invested all in one go)
• ACCUMULATION PLAN (younger people, lower net worth, periodically investing the same amount)

For private investors, fees paid to banks and mutual funds managers can significantly impact portfolio performance. To build a well diversified portfolio keeping costs down the model assumes majority of investments in Exchange Traded Funds (ETFs).

For full explanation of terminology used and model specifics, it is recommended to go through the Glossary sheet as

This Best Practice includes
1 Excel workbook

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Further information

To finalise a sound investment strategy meeting the ultimate goal of a stress-free life in retirement, while suggesting specific investments directly executable through your home banking, saving money on fees.

Private investors and everybody concerned about disposing of sufficient resources to cover retirement.

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  • Samantha (wenhua) Lee(last updated: 29/03/2021 06:05)
  • Kanat K(last updated: 10/11/2020 08:51)

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