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When you build a FarPlanner plan, you can add accounts to track your own actual accounts’ balances. You can add these accounts within your taxable, IRA, 401k and Roth ‘allocation groups’. FarPlanner recommends at least three accounts to balance safety and growth.
When would you only add two accounts to an allocation group then? This makes sense if one of the accounts is managed. For example, some retirement investment companies let you choose a target-date fund. These funds automatically shift allocations into less risky bonds as you get closer to your retirement year.
What about the second account? FarPlanner recommends having a safe and liquid cash account in every allocation group. As FarPlanner forecasts your future finances, it shifts money needed to pay expenses into that safe cash account. This balances safety and growth in your plan.
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