When I heard that Reality’s Wealthbuilder 2.0 by Money Magazine had just been released, I was eager to check it out. I wasn’t disappointed. Longtime readers of Mac Monitor may recall reviews of three excellent financial management programs: Managing Your Money 4.0, Quicken, and MacMoney. Wealthbuilder picks up where those three leave off.
Managing Your Money goes beyond the other two in that it can manage and track investments via a portfolio manager, project future insurance and retirement needs, do budget analysis, as well and perform several other useful functions, but even it pales in comparison with Wealthbuilder as a full service, long-range financial manager.
What doesn’t Wealthbuilder do? It doesn’t deal with daily transactions, allow you to write checks, or manage home and business accounts. What it can do — and does very well — is provide you with the tools to make your own investment decisions, plan for future goals (i.e. college expenses, retirement, etc.), track your investments, and achieve an optimal investment mix. It also provides an optional online link to investment data.
When you first launch the program, it asks for information about you, your business, and your investment philosophy. This information will be used later in various calculations.
The next step is to fill out the Budget Worksheet and Balance Sheet. Those owning one of the above-mentioned financial management programs can supposedly import data directly from them into Wealthbuilder. I say “supposedly” because it didn’t work for me. However, the problem resided in Managing Your Money, not Wealthbuilder. As a dedicated user of Managing Your Money 4.0, I thought I knew every little bug that ever crawled out of that program. Not so. When I attempted to export the Balance Sheet, this little sucker zeroed out our net worth within the program itself! Since I hadn’t backed up in a couple of weeks, I was faced with having not only to manually enter all of the data into Wealthbuilder, but also that two weeks’ worth of information back into Managing Your Money. So MYM users beware!
The Budget Worksheet provides a percentage breakdown of expenses and savings, which are supposed to help you determine if you are spending too much money. I didn’t find it particularly helpful because it showed that people in our financial situation typically are able save 23% of their income. Hah. I’m doubly suspicious of that figure since in the example in the manual, 23% was also the amount shown as being saved by the fictitious user. I don’t know too many people who manage to save 23% of their income, no matter what it is. One other minor complaint: while still in the First Time User’s mode, I wanted to move into the Portfolio Manager in order to list our assets more accurately in the Balance Sheet. However, it wouldn’t let me utilize the functions of the Portfolio Manager until I switched to “Expert.”
Once all data is entered, Wealthbuilder’s power can be tapped in a number of ways. The Financial Toolbox calculates how much life insurance you need, how much federal tax you owe, your estate taxes, how much house you can afford, and monthly payments on mortgages and loans.
The Portfolio Manager is an easy-to-use tool for tracking your investments, although many people will not need all of the features it offers. They can simply enter their investments in the appropriate subworksheets available in the Budget Worksheet and Balance Sheet. However, for those wishing to follow their investments more closely, it allows you to record transactions for stocks, corporate bonds, mutual funds, options, futures, CDs, collectibles, or any other appreciating asset you may wish to include. It also maintains helpful tax information and tabulates realized gains and losses, dividends, interest, and capital distributions.
Objectives let you plan for future financial goals by setting up financial objectives for anything you can imagine: retirement, a child’s college education, buying a home, a trip, whatever. Managing Your Money has a similar feature, although it is not as wide-ranging. Incidentally, in the retirement scenarios of both Managing Your Money and Wealthbuilder, the bottom line on how much money we will need to retire eventually is reassuringly close. (I say “reassuringly” with tongue in cheek. The first time you do a projection like that you are apt to be dumbfounded by how much money you are going to need to meet that particular goal.) It also shows how much you need to save annually and at what rate of return in order to meet your objective.
The Reality Timeline is like a snapshot of your future finances. Its primary purpose is to illustrate whether you are meeting your financial goals, but it also allows you to play “what if” games by showing the impact of possible future events on your objectives.
Asset Allocation lets you create a diversified portfolio with the highest expected return compatible with your risk tolerance. The model, which is like those used by professional money managers, takes into consideration your financial goals, risk preference, and the historical return on investments when creating your optimum portfolio. Since different objectives require different investment strategies, it generates an individually diversified porfolio for each objective you have created. Pie charts and graphs are used to illustrate your current portfolio, a suggested portfolio, risk and return, projections, etc. in order to help you better comprehend the ramifications of your choices. Asset allocation does not tell you which individual securities you should own, but rather how they should be divided between asset classes.
When you have decided on your asset allocations, you are ready to begin the Research into exactly which investments should be included in your portfolio. The basic Wealthbuilder package comes with databases of over 500 mutual funds, 500 stocks, and 500 corporate bonds. They can be expanded to include over 2500 mutual funds, 5000 stocks, and 6000 corporate bonds through an online membership or a disk-based plan. I was very impressed by the wealth of information included in the databases. You can, of course, print out information on securities in which you are interested. Armed with those printouts, and by updating data (quarterly by disk, monthly by modem), an active investor should be able to dispense with the services of a full-service broker entirely — although he or she would still need a discount broker to effect stock and bond trades.
In order to write this review, I was provided with a free three-month online membership to Reality (Wealthbuilder’s telecommunications link to the financial world). Due to an INIT/modem conflict, I was unable to connect using my Dove-accelerated SE, and had to use Jim’s fx. As a result, I was able to view the program in color. (It’s really pretty.) But back to the subject… For a flat monthly fee, every time you connect you can receive updated quotes (a 15 minute delay) from the NYSE, AMEX, and NASDAQ on your portfolio and on the securities you have selected from the databases, as well as send and receive e-mail. Once a month you can update the information contained in all of the databases. In my case, since I was provided with the “platinum plan” — the maximum number of mutual funds, stocks, and bonds — updating the whole thing took about an hour. The download took about 40 minutes and processing another 20. The annual cost for a disk-based data plan is $119.95, or $199.95 for quarterly updates. The less expensive (I think it’s called the “gold plan”) online service is available for $9.95 per month. This plan only updates the mutual funds. The “platinum plan” costs $17.95 per month and updates the stock and bond databases, as well as the mutual funds. All of the subscription options provide the first month (or disk) free of charge. Active investors will undoubtedly find the subscription service to be an invaluable feature of Wealthbuilder. Inactive investors will probably just find it expensive.
After your investment strategy has been laid and your securities choices made, you are ready to print out the Action Plan. This is a report that summarizes your decisions and provides specific guidelines for carrying them out. The rest is up to you.
Wealthbuilder 2.0 is a terrific program. Now that I’ve used it, I can’t imagine ever doing without it. I believe that anyone who is interested in long-range financial planning will want it, too.
Requirements: Any Macintosh with 1MB RAM, Hard disk, 800K disk drive, System 6.0.5 or higher.
Optional online link requires a Hayes compatible 1200, 2400, or 9600 baud modem
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