If you know how much you need for your retirement or what the impact of purchasing a property is going to be on your wealth you are probably an exception among us. If you don’t, this article is for you!

Estimating how much S$1,000 invested at 8% return after 5 years is pretty tough without a calculator, so just imagine how difficult it is to estimate if your portfolio is on track for your retirement while taking into account the education fees of your children, the family holidays you want to offer in Europe, the property you want to purchase, and the spectre of a market crash.  Here is the solution, and for free!

ProsperityPersonal.sg is a community based platform which provides free wealth management tools that allows you to understand investment products and to manage your wealth using drag and drop investment and expense event icons. The figure below shows a graphical financial plan taking into account retirement, property investment and education fees.

This personal finance tool enables you to understand financial planning and to define a long term strategy. Everybody has an investment preference, be it investing in the stock market or buying properties instead. Now you can compare and understand the differences in terms of cash flow and long term impact and can thus make better investment decisions.

With its friendly user interface, drag and drop features, the financial planning tool offers a very intuitive way of understanding long term personal finance. It addresses the principles of personal finance and enables you to understand the effect of compounding, loan repayments and future cash flows under assumptions that can be changed on the fly.

Online financial calculators deliver a strong added value by enabling online visitors to define financial goals and needs simulations in an interactive and graphical way. Visitors are keen to know more about personal finance, and those who use online calculators are more likely to change their savings behaviour after seeing the results of their simulations. This clearly shows the value of the information embedded in online personal finance calculators, private investors often believe they are safe with their current levels of savings and investments, but actually they are not.

One Size does not fit all

The advanced reader familiar with financial computations might understand this very quickly, with thirst for more.

As a matter of fact, the Wealth Manager was designed for beginners in the financial world, with a strong emphasis on graphical outputs, because one picture says a thousand words! So the good news is: there is more.  ProsperityPersonal.sg also provides an extended tool called the Prosperity Planner targeted towards advanced users.

Using the Prosperity Planner allows users to build their current portfolio of investment products, insurance coverage and real estate properties to consolidate the current wealth. An example is given in the next Figure. The consolidated portfolio then feeds into the Wealth Manager to simulate the future, a powerful feature to understand if  you are on the right track. Historical Volatility ranges can also show maximum and minimum benefits. Furthermore, insurance coverage is shown graphically as well, which allows  users to visualize the differences between term insurance and whole life insurance for example.

Summary Report

The Prosperity Planner has an additional feature to summarize the simulation results in a neat PDF document. It gives the user a clear overview on the personal balance sheet, cash flows and personal finance ratios together with the insurance coverage summary. This shows in a blink of the eye the strength and weaknesses of the user’s portfolio, shedding light on potential gaps.

A must-try application, not only to play with and visualize where you are heading to, but also to dig into the world of financial products, their benefits, and to make educated investment decisions before meeting your financial adviser. As they say Once bitten twice Shy !

Personal Finance Innovations and the wisdom of the Crowd

A lot has been going on in the personal finance domain, especially in the US. The financial crisis brings many investors to wonder about financial mechanics and the investment strategies of money managers, with more and more online personal finance applications popping up, this industry is just awakening.

Since Mint.com started offering a free online expense categorization platform, more than ten other companies started moving into that space. So much so that O’Reilly launched Money:Tech, a conference concept where Wall Street meets Web2.0.

Indeed, PCs and the Internet have changed the personal finance space dramatically, with information spreading at the speed of light, the knowledge gap between the literate and the non-literate people in personal finance is decreasing. An increasing number of private investors are trading Forex and derivatives, something nobody would have predicted 15 years ago.

Web2.0 brought us communities and now is the time to leverage on it. Instead of trying to re-invent the wheel by learning how investments work with trial and error (a very costly and stressful endeavor), communities enable us to learn from others and share experiences that are beneficial to everybody. And prosperitypersonal.sg is exactly where Web2.0 meets personal finance. So feel free to build your knowledge and share insights with a community of like minded users through blogs, forums and posts.

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