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The Balance Sheet allows you to see and keep track of all your asset and liability accounts in one organized place.
To set up your Balance Sheet, just add your asset and liability accounts with the intuitive Connect Accounts and Manual Accounts tools.
Let’s walk through an example of how to populate your balance sheet. John and Jane Saw are motivated to get control of their finances.
They begin by clicking Connect Accounts. First, they want to connect their retirement account. They choose their institution. Next, they type in their user id and password. Then click submit. As their accounts are added they will appear in the Linked Accounts window as well as on their Balance Sheet in the background.
Next, they click on the Link Another Site. They search for and choose their bank, enter their credentials and submit.
Credit cards can be added in the same way. Select Link Another Site. They search for their credit card company and select it. They enter their credentials and submit.
John and Jane’s largest asset is their home. This can be added by clicking Manage Manual Accounts. The set of tiles includes real estate, autos, valuables, stocks, bonds, options, lending and borrowing that are not available through connected accounts.
After choosing Real Estate, they fill in the information on their home. They choose the Get Zestimate button to use Zillow’s valuation but can edit if unavailable or viewed as inaccurate. For budgeting purposes, they have an option to include a negative number for maintenance costs like property taxes, insurance and utilities in the annual cash flow line to have it counted in the dashboard. Mortgage interest will be handled separately.
Jane has a company stock plan that is not available electronically. Choosing the Stock tile allows her to enter the characteristics of this holding. Entering the ticker symbol if publicly traded or a close proxy will auto fill the stock characteristics, or they can be entered manually. After completing the entries, clicking save will then show the home and stock manual accounts.
After they close, they can see the Balance Sheet constructed thus far.
John and Jane’s home mortgage is available electronically. They use the + icon, submit their credentials and respond to a passcode request. Checking and outstanding mortgage balance accounts appear in the Linked Accounts page. After closing, the Balance Sheet now includes all of their assets and liabilities.
The Managing Institution Connections icon is used to remove a connection, customize account names, enter account fees and configure which accounts to include on the balance sheet.
It is also important to make sure that any mortgage or auto loan is linked to its corresponding asset. Using the Manage Manual Accounts icon and selecting their home under Existing Manual Accounts, the previously entered details appear. The remaining entry for Corresponding Liability can now be entered by selecting it from its dropdown menu. Save the updated home account information and then close manual accounts to return to the Balance Sheet.
Now that their Balance Sheet is populated, let’s look at the Wealth Portfolio Dashboard. It summarizes your wealth portfolio characteristics by aggregating all of your assets and liabilities and comparing it to your custom benchmark.
Some people may be surprised to see that their bond allocation is a negative number. This is not an error. This is typical of people with a relatively large mortgage. A mortgage is a bond and its borrowing magnitude may exceed their bond investments. John and Jane’s net worth yield includes what they are paying in mortgage interest relative to what they are receiving from expected cash and bond interest as well as stock dividends.
The house/car button shifts the dashboard to investment mode by hiding their real assets and associated liabilities.
See the positive bond holdings. Investment mode allows one to focus on analyzing their cash, bond and stock asset allocation relative to their customized benchmark.
Now they have the data required to use Ripsaw® Wealth Tools for portfolio construction, monitoring and revision.