This page focuses on a two-account allocation strategy with FarPlanner. As mentioned on our overall allocation page, unless guided by your planning experts this is likely not a recommended strategy since safety and risk are not as well balanced as other options. As usual, please run any allocation approaches past your qualified financial and tax planning experts.
The first account for this strategy should be a separate cash type (e.g., checking, savings, settlement brokerage) for each account group (e.g., 401k, IRA). This is the ‘safe’ account that FarPlanner stages funds to that need to be paid or transferred immediately in your plan.
This strategy’s second account in each account group can be one of the following:
- A ‘real’ lifecycle account: Lifecycle accounts auto-shift funds between bonds and stocks based on your current and target retirement ages
- A ‘stand in’ account representing your expert planners’ investments: This account just ‘lumps’ together the total invested balance managed by your expert financial and tax planners. Note that your planners will need to let you know taxes owned on the investments they manage for you
- A higher-return account such as a stock fund: This might be fund representing the S&P 500 for example. This issue here is that FarPlanner might suggest shorter-term transfers to the cash account than is recommended for a high-risk fund (see the preferred 3 fund allocation approach instead)
- A ‘stand in’ account representing your day-trading investments: This account just ‘lumps’ together the total invested balance that you are using for your day-trading stock market bets. Note you will need to track your taxes due on your stock market bets
In each of these cases, you should tell FarPlanner each account’s estimated ‘APR’ for more accurate long range forecasts, as well as their cash/bond/stock allocations for rolled up displays.