Calculation Settings - Grow [all] items using stage defaults (preference)

In addition to setting account growth in the plan's default Preferences and at the individual account level, Voyant also has the option to set growth by stages. For example, a firm might advise their client to use a more aggressive investment strategy before retiring and then later rebalance this portfolio after retirement to hedge against risk. They could use the option in the software's Preferences to "Grow [all] items using stage defaults" to set asset allocations and/or fixed growth rates for accounts based on the stages in the plan's timeline.

 

Note: It is important to understand that when this preference is ticked, stage-specific growth settings will override any growth settings edited at the individual account level.

 

Using stage-based growth settings is an all-or-nothing option. The "Grow [all] items using stage defaults" preference must be ticked in Plan Preferences if you intend to use this timeline-based feature.

 

If you choose to use stage-based settings, tick this option in Plan Preferences (on the right side of the screen).

 

 

 

If you intend to use asset allocation to derive a stage-based growth rate from the software's market assumptions, be sure to also tick "Grow [all] investment and retirement accounts using asset allocation". Otherwise, a default stage-based fixed growth rate will be applied.

 

 

Next, go to the Time screen and click a stage. Click the Growth Rate / Asset Allocation button.

 

Asset allocations (and market assumptions behind them) are one of two options in the software for calculating the capital growth on investments. The other is using a simple fixed growth rate.

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. 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.

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.

A single fixed growth rate or asset allocation can be set to grow all investments and retirement accounts during the selected stage or growth can be set to be calculated during the stage differently, based on account type (taxable, tax free, tax deferred).

To set a single fixed growth rate or asset allocation for the stage, select the first link, "Asset Allocation".

 

The Asset Allocation panel also provides the option to enter a fixed growth rate for the stage.

 

If instead you want to set growth using an asset allocation, click Edit or double-click the pie chart.

 

Among the asset classes provided, enter an asset allocation that amounts to a 100% allocated portfolio. Click OK when finished.

 

If you save and reuse model portfolios, click Edit and then click Load to use an asset allocation for your library of model portfolios.

 

Another option is to click Optimise and select a portfolio based on risk.

 

Growth can be set to be calculated during the stage differently, based on account type (taxable, tax free, tax deferred). To enter stage-based growth settings based on account type, click "Account Settings by Type".

 

 

Links to Taxable, Tax-Deferred, and Tax Free account types will be shown.

Taxable – Current accounts, savings, offshore taxable investments.

Tax deferred – Money purchases and drawdown pensions, onshore and offshore life funds (bonds), discounted gift trusts, other trusts (a general category asset for trust modelling)

Tax free – ISAs, venture capital trusts (VCT), enterprise investment schemes (EIS), charitable trusts, national savings certificates, child trust funds, other trusts, loan trusts, spousal bypass trusts

 

 

Clicking any one of the three links will show the same panel, only the fixed growth rate or asset allocation will only be applied for the selected account type.

 

 

Repeat these steps for the other stages in the timeline.

 

 

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

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