Grow [all] investment and retirement accounts using asset allocation (preference)

"Grow [all] investment and retirement accounts using asset allocation" is a preference that allows all investments (e.g. unwrapped investments, ISAs) and retirement accounts (money purchases and drawdown pensions) to be set automatically to be grown using asset allocations. 

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Using asset allocations to set account growth

An asset allocation refers to how an investment is split by underlying asset classes.  For example, we could define an investment as being made up of 70% UK Equity and 30% Fixed Interest.

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Asset allocations (and market assumptions behind them) are one of two options in the software for calculating the capital growth on investments.

 

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The other is using a simple fixed growth rate.

    

 

Unlike a fixed growth rate, asset allocations derive an average 50th percentile return, which the software uses as the investment's assumed rate of return, as well as an upside and downside range or return, each being two standard deviations from the 50th percentile. This range of return can also be equated to a level of risk.

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Because of the range of return an asset allocation provides that a fixed growth rate cannot, there are some features in the software require at least some investments to be grown using asset allocations if they are to be used. These features include the Asset Allocation Overview as well as the Monte Carlo and Historic simulations.

 

Ticking this preference disables the fixed growth rate as an option

Normally in Voyant you have the option to grow accounts using either a fixed growth rate or to have growth derived from an asset allocation.

Selecting the "Grow [all] investment and retirement accounts using asset allocation" preference will tick the "Use Asset Allocation" setting for all investments, money purchases and drawdown pensions. When ticked, the fixed Growth Rate field will be disabled (greyed out).

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If you would rather have the option to use a mix of fixed growth rates and asset allocations in the plan, setting this on a per account basis:

1. Click Preferences (the cog icon, top-left).

2. In Plan Preferences on the right side of the Preferences screen, expand the bottom most panel, Calculation Settings.

3. Check the "Grow All Accounts Using Asset Allocation" or "Grow all savings and cash accounts using 100% cash asset allocation" setting. If these are ticked, untick them.

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4. Click the Apply button to save this change or click OK when asked whether you want to save your changes.

5. If you want to make this the software's default mode of operation going forward, as you create new plans, also untick the "Grow [All] Accounts Using Asset Allocation" in the Calculation Settings panel to the left side of the screen, under System Preferences

Important Note: Understand that switching off this preference will switch all of your savings, investments, money purchases and drawdown pensions from using an asset allocation to use of a fixed growth rate for calculating future returns.

6. Once completed, review the investments in the plan and set them accordingly. Enter a fixed growth rate for the investments that are to be grown using a fixed growth rate. Tick Asset Allocation for those that are to be grown using a derived growth rate and on the subsequent Asset Allocation panel, load or enter the appropriate portfolio/allocation.

 

Plan Preferences vs. System Preferences

Changes to this setting on the mirror Default Inflation / Growth Rates panel in System Preferences, on the left side of the screen, will be used only going forward, as you create new client cases. System Preferences are used as a template only for new client cases. Changes to System Preferences will not retroactively affect your existing client cases.

If you want to change this preference in any existing client cases, you will need to open and edit them individually, in each case's Plan Preferences. 

 

Related topics

Growth setting is greyed out for investments, pensions and savings.

Grow [all] savings and cash accounts using a 100% cash asset allocation (preference)

Growth and Yield - Setting capital growth, dividends and interest on investments