I am developing a financial planning platform.. users will enter income, assets, liabilities, cash flows, goals (retirement, college for kids, etc) and the final report should detail the progress toward goals.
I have more of a programming background than financial, I don't think underlying calculations are terrible difficult but I want to be certain I get them right. Is there a text book or Finance book that would be considered the source for this... like the CFP text book? Thanks
Tue Jan 24, 2017 8:47 pm
oldguy Senior Member
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quote: users will enter income, assets, liabilities, cash flows, goals (retirement, college for kids, etc) and the final report should detail the progress toward goals.
That's a (deceptively) tough one. The inputs and the answer are customized/fragmented based on individual desires/goals. The vast set of variables, life changes, goal changes, life happenings, makes the calculated probable outcome to be near useless. In fact, the failure of US wage earners to become millionaires demonstrates that futility - yet building a million is actually not mathematically difficult.
If the family goal is 2 million, you need to invest $10,000/yr for 30 years. If the family goal is to trade cars every 3 yrs, that $10,000/yr gets directed to new cars instead of family wealth. Or, if the family is to be risk-averse, they may need to direct $60,000/yr to get $2M.
I found that budgeting the INVESTING was far more useful than budgeting the SPENDING.
Eg, $5000/yr invested at 11%/yr for 30 yrs = a million. Or $10,000/yr if you want $2m. Or $15k/yr for $3m - and so on. If the family focuses on the $Xk/yr, no exceptions, very little other control is needed. Very few money arguments, the knowledge that you are on track to be multi-millionaires means that you are free to spend all other money on whatever you want. [/b]