FAQs – More about Investfit™

Credentials

Yes. The investment functions and financial calculations are regularly reviewed by an independent body. To date we have had the program reviewed twice, first by AccessUTS (The consulting arm of The University of Technology Sydney) in November 2015 and second by KPMG Actuarial in July 2017.

Even the most powerful CPU available is not able to perform the calculations required to complete the investment simulations and optimisation process in real time. Therefore we use special purpose processors powerful enough to do the job. Investfit has developed the programs that run these processors and are part of investfit’s proprietary assets.

This is one of the proprietory processes developed by the investfit team. The process involves simulating the outcome of a large number of investment strategies (potentially up to 10,000) and simulating each strategy thousands of times. Each simulation represents a different but possible set of investment returns that might be expected based on the behaviour of investment markets. Investfit does this each time you regnerate a set of results for your client and each time identifies the strategy that leads to the best outcomes. This is the optimal investment strategy.

Data Security

Yes. Very. Investfit transmissions are encrypted using the same encryption technology as the major banks. Additionally, personal identifiers (name, email etc) are not attached to data as it is transmitted over the net.

General Questions

When investfit projects future outcomes it uses a stochastic engine instead of a deterministic engine as in a spreadsheet model. The deterministic approach means the adviser or dealer group “determines” the investment market returns assumptions to forecast future outcomes. The problem with this approach is that these assumptions are static and this can lead to overly optimistic projections that underpin advice.

However a stochastic engine allows us to factor in the fact that markets go up and down and so market returns also go up and down. This gives us a far more robust projection and quality of advice. We can also measure how certain we can be of a particular outcome. Stocahstic routines are used in many industries.

 

Yes. You include them as part of either superannuation, if held in super, or as a non-super investment. You can also include any debt against these investments. Investfit will include the cost of this debt and the benefits of negative gearing, as they may apply depending on current earnings and tax threshold. The program also allows for land tax in net property returns. Investfit assumes that any direct property held as an investment is sold and the debt paid off upon retirement. The residual capital is re-invested in LPTs that can be sold down over time.

Yes. The amount of tax deducted from non-super investment earnings is based on the answer to the question regarding current level of earnings (wages & Salary etc). Tax tables are updated as required.

Yes. The program assumes the value of the family home increases at the AWE (Average Weekly Earnings) rate assumption over time. This may be on the conservative side, which may understate the results for a scenario that includes equity in the home to fund retirement.

Yes. Investfit performs the asset tests for centrelink payments such as the Age Pension.

Yes. Investfit increases earnings from wages and salaries at the prevailing AWE (Average Weekly Earnings) Rate for Australian workers. The default AWE rate is in the assumption panel and can be changed depending on a client’s own circumstances and view on the rate at which they expect their earnings to increase from year to year.

Yes. Investfit increases all non-investment ralated cashflows at the CPI rate assumed in the assumption panel. You can change this assumption depending on your view on inflation.

No. If an asset is purely held for lifestyle purposes and not for generating income then they should not be included. However if the plan is to sell it one day to top up income producing investments, then you can include the expected proceeds from the sale in the “Other Savings” question during the input process. Make sure to select the year which the client is planning for this to happen.

Investfit uses the default returns displayed in the assumption panel in the report. These returns are based on the geometric mean return for the various investment markets based on history sourced from the likes of the RBA, ABS and World Bank. However they will typically be fixed according to the dealer group in-house assumptions.

Problem Solving
This means that based on the current financial circumstances (current investments, super contributions, savings, withdrawals and risk tolerance) the retirement income goal that is stipulated is too high. The user should observe the Retirement Income Vs Legacy trade off chart as a guide to what income and legacy outcomes are possible.

Either adjust the retirement income goal, risk tolerances (certainty level or shot term fluctuations), increase super contributions or other savings or utilise home equity.

This means that based on the current financial circumstances (current investments, super contributions, savings, withdrawals and risk tolerance) the legacy goal stipulated is too high. Observe the Retirement Income Vs Legacy trade off chart as a guide to what income and legacy outcomes are possible.

Adjust the retirement income goal, risk tolerances (certainty level or shot term fluctuations), increase super contributions or other savings or utilise home equity if it’s expected to have equity available in the home.

Occasionally firewalls within networked computers may prevent data from being tranmitted over the internet. In this case try using a non networked computer.

Another reason for a failed instance could be that your browser is an old version. Investfit works best on supported browser versions. Check with your IT support and then contact investfit via our Contact Page.