Next Best Dollar Calculator

Important

Designed to help you quickly identify how to best distribute your money, Next Best Dollar maximizes each dollar you put towards your goals. Account types included in the Next Best Dollar Block include the following:

1. Credit Cards
2. Student Loans
3. Emergency Fund
4. Upcoming Goals
5. Retirement Fund (Employer Sponsored Plans)
6. Health Savings Account (HSA)
7. Taxable Account

These accounts will then be subdivided into non-discretionary and discretionary groups as follows:

Non-Discretionary

1. Credit Cards – Minimum Payment
2. Student Loans – Minimum Payment
3. Emergency Fund
4. Upcoming Goals

Discretionary

1. Credit Cards – Additional Payment
2. Student Loans – Additional Payment
3. Retirement Fund – Employer Match
4. Retirement Fund – Additional Contribution
5. HSA
6. Taxable Account

Non-Discretionary Payments

In all cases, non-discretionary items will be funded in order before any discretionary items are funded.

1. Credit card minimum payments are calculated dynamically based on the credit card’s interest rate. If you have multiple credit cards, separate accounts will then be further ranked based on descending interest rate.
a. Minimum payment rate = 1.0 – 1.0 / (interest rate/ 12.0 + 1.0)
b. There is a minimum payment threshold of $25, so we will use the greater of the threshold and the calculated minimum payment.
2. Student loan minimum payments will be imported from the Student Loan Block and are specific to each loan. If you have multiple Student Loans, separate accounts will then be further ranked based on descending interest rate.
3. Emergency Fund completion is a requirement. It will use the highest milestone monthly payment from the Emergency Fund Block as the initial contribution amount carried into Next Best Dollar. Next Best Dollar may then vary the contributions to the Emergency Fund while still reaching your desired goal date.
4. Upcoming Goal payments will be calculated based on the minimum payment amount needed to reach the Upcoming Goal by the goal date. Therefore, the savings amounts from the Upcoming Goal Block will not be used in the case where goal was over- or under-funded.

Discretionary Payments

Discretionary items will only be funded after all non-discretionary items are funded and only with the remaining savings amount available each month.

To determine the funding order for the discretionary payments, the system will:

1. Look at applying the available money to each account.
2. For each account, we look to see how it impacts your net worth:
a. How much interest do you save with your Credit Cards and Student Loans?
b. How much does your account balance increase due to contributions (including employer matching) and investment returns?
3. Accounts are then placed in descending order based on largest impact to net worth.

Now that the sorted funding order is determined, the excess funds are applied based on the account type as described below:

1. Credit Card & Student Loans:
a. Any excess funds are allocated to the debt until the debt is paid off.
2. Retirement Fund & HSA
a. Any excess funds are allocated up to the applicable contribution limits.
3. Taxable Account
a. Any excess funds can be allocated to this account as it has no contribution limits.

Apply Growth and Interest to Accounts

Interest or earnings are credited to the accounts in addition to inflating goal amounts, contribution limits, and available funds for consideration.

You will have the ability to select the portfolio and average rate of return that will apply to your Retirement Fund(s), Health Savings Account(s), and Taxable Account. The average rate of return for your selected portfolio will be applied monthly to calculate your future account balances.

Each Upcoming Goal will use its designated portfolio and average rate of return. You can change the selected portfolio for an Upcoming Goal in the Upcoming Goals Block.

Your Emergency Fund will grow monthly at a 1% annual rate of return.

Next Best Dollar

The system will define where your next dollar should go. Even though your Emergency Fund is a non-discretionary account and may not have the largest direct impact to your net worth, the system will show your Next Best Dollar as going to your Emergency Fund until it is fully funded and will also make sure the account keeps up with inflation.

We do this because we want to make sure in the case of an emergency, someone is not adding to their credit card debt and accruing higher interest in a time where they are trying to pay off their credit card debt and save on the amount of interest paid.

After your Emergency Fund is fully funded, Next Best Dollar will highlight the first discretionary account that receives any additional funds after your non-discretionary account minimum payments have been paid. Based on how the accounts are sorted for the funding order, this discretionary account will have the highest net benefit to your net worth.

Assumptions and Limitations

All asset and net worth information included is provided by you or your designated agents and is not a substitute for the information contained in the official account statements provided to you by custodians. The current asset data and values contained in those account statements should be used to update the asset information included in program.

IMPORTANT: The projections or other information generated by iBlocks regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

The return assumptions in this program are not reflective of any specific product, and do not include any fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used in this program. It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be used as the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overall financial objectives. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.

All results use simplifying assumptions that do not completely or accurately reflect your specific circumstances. This program does not have the ability to accurately predict the future. As investment returns, inflation, taxes, and other economic conditions vary from the program’s assumptions, your actual results will vary (perhaps significantly) from those presented.

All calculations use asset class returns, not returns of actual investments. The projected return assumptions used are estimates based on average annual returns for each asset class. The portfolio returns are calculated by weighting individual return assumptions for each asset class according to your portfolio allocation. The portfolio returns may have been modified by including adjustments to the total return and the inflation rate. The portfolio returns assume reinvestment of interest and dividends at net asset value without taxes and assumes that the portfolio has been rebalanced to reflect the initial recommendation. No portfolio rebalancing costs, including taxes, if applicable, are deducted from the portfolio value. No portfolio allocation eliminates risk or guarantees investment results.

This program does not provide recommendations for any products or securities. This program does not provide legal, tax, insurance, or accounting advice. Before making decisions with legal, tax, insurance, or accounting ramifications, you should consult the appropriate professionals for advice that is specific to your situation. The results displayed may vary with each use and over time.

Risks Inherent in Investing

Investing in fixed income securities involves interest rate risk, credit risk, and inflation risk. Interest rate risk is the possibility that bond prices will decrease because of an interest rate increase. When interest rates rise, bond prices and the values of fixed income securities fall. When interest rates fall, bond prices and the values of fixed income securities rise. Credit risk is the risk that a company will not be able to pay its debts, including the interest on its bonds. Inflation risk is the possibility that the interest paid on an investment in bonds will be lower than the inflation rate, decreasing purchasing power.

Cash alternatives typically include money market securities and U.S. treasury bills. Investing in such cash alternatives involves inflation risk. In addition, investments in money market securities may involve credit risk and a risk of principal loss. Because money market securities are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency, there is no guarantee the value of your investment will be maintained at $1.00 per share, and your shares, when sold, may be worth more or less than what you originally paid for them. U.S. Treasury bills are subject to market risk if sold prior to maturity. Market risk is the possibility that the value, when sold, might be less than the purchase price.

Investing in stock securities involves volatility risk, market risk, business risk, and industry risk. The prices of most stocks fluctuate. Volatility risk is the chance that the value of a stock will fall. Market risk is chance that the prices of all stocks will fall due to conditions in the economic environment. Business risk is the chance that a specific company’s stock will fall because of issues affecting it. Industry risk is the chance that a set of factors particular to an industry group will adversely affect stock prices within the industry.

International investing involves additional risks including, but not limited to, changes in currency exchange rates, differences in accounting and taxation policies, and political or economic instabilities that can increase or decrease returns.