What is the MoneyReady App?
Obviously, this is the question I am most often asked.
You'd think I would have written this blog post when the MoneyReady App was released over 5 years ago, and I always meant to, but the app has evolved so much and so rapidly, it was a little hard to pin down.
Of course, we continue working on it and adding features, but I think it's high time I give you a brief overview of what the MoneyReady App is and what it can do for you today. Links on this page will open in a new tab.
The MoneyReady App is a financial planning web app. It aims to determine a plan for you to set up your financial affairs to meet your financial goals, now and in the future.
The main program is called the TIME MACHINE. It takes your current state of affairs, in as much detail as you want or need to give it, and projects it into the future. You can learn how it works in this 3-minute video.
It gives you extensive reports of its findings, so you can see if your scenario works for you or not. You'll see for every year in the future whether or not you have enough money to meet your spending goals, or if you have too little, or too much. Given this information, you can adjust any parameter of your scenario so that the new results better align with your goals, or to create alternative what-if scenarios. You can also save the results and the scenario that created it, so you can rerun it at any time in the future with updated values for your current situation at that time.
Your scenario includes how much you want to spend in the future, but that's often something people don't know. So another tool we call Choose your Legacy works on top of the TIME MACHINE to figure how much you can spend and leave the legacy amount you specify in your accounts, after tax, at death. This tool will tell you for example that in this range of years, you could spend more than what you originally planned, and that range of years you should spend less.
Often that question is asked when people reach retirement. At that point, they may have a retirement nest-egg, and want to know how much they can spend and not run out of money. When that is solved, the next question is usually: Ok now I know how much I can spend, but what's the best strategy for withdrawing from my accounts? What is the best mix of spending from my TFSA/RRIF/Non-Registered accounts every year, so that I pay less taxes overall? That's another tool we call the Withdrawal Optimizer, which uses an algorithm based on solid theory, not rules of thumb, to solve that question. It will show you how much to withdraw from each of your accounts in every year such that your legacy is maximized.
Another common question from people who are planning to retire soon is when should I start CPP/QPP and OAS? The CPP/QPP and OAS optimizer itself leverages the Withdrawal Optimizer allowing you, in one click, to find the most optimal age to start the pensions by scanning through all the applicable ages.
That is an example of a scan we set up for you, but you can also set up any SCAN yourself. You can set to vary any of the parameters of your scenario within a given range, and you can combine parameters. For example, you can scan for a range of dates to stop working, or when you'll die, or your amount of spending. Other example SCANs you could do would be for ranges of future inflation rates, or investment growth rates. These rate scans can be useful to see how your scenario fares under different assumptions of market rates.
We also have tools for directly stress-testing your scenario under variable market conditions in future years. You can set Market Crashes to happen any time in the future and at regular intervals. We also have a sophisticated model for market rates and can run a Monte Carlo simulation to show you in what years your scenario could be vulnerable.
DIY financial planners are also often DIY investors, so we also provide some tools for portfolio management. The first is that with our Wealthica integration, you can import your portfolio if you have an account with them. Or you can enter the investments in your portfolio manually, and we will keep the values updated using market data (over 60,000 stocks, ETFs and mutual funds), obtained from Fundata Canada. We have a rebalancing tool and a portfolio optimizer tool based on portfolio theory.
But shorter-term portfolio management and long-term financial planning can be difficult to reconcile. You may own high-flying stocks with very high returns now, but the long-term performance from most portfolio managers is expected to be that of the market index (minus fees). To reconcile short-term and long-term expectations, we allow you to set your current expected rates of return for your investments, and have the TIME MACHINE automatically switch to long-term rates after a set number of years. This way, you get the best of both worlds.
So the MoneyReady App is a powerful, very comprehensive app that allows you to plan as many what-if scenarios you want to try. It is very empowering for people as you learn financial planning by actually doing it. The most common comments I have gotten from users are that first, it was an eye-opener for them, and then it brought them peace of mind as they gained control over their finances. Many have told me they wished they had this app years ago. Financial planning is a life-long skill and it is never too early to learn it.
Once users understand all of this, the cost for using the app becomes just a small investment in securing their financial future. It also assures the ongoing level of detail and support that you have come to expect from us.
That's it in a nutshell. For all the details, there's the MoneyReady App eBook you can download once logged in. It is a great introduction to financial planning for Canadians, as well as how to use the app. There's help on every page of the app itself. If anything is still not clear, there is the MoneyReady Forum where you can ask questions and get updates.
So what have I myself learned? I come from an academic background and what keeps me motivated in developing this app is learning. The finance stuff, and the programming stuff is fun and easy for me to learn. The interactions with users are the most satisfying, and where I learn the most. Unlike most apps you'll encounter on the internet, I treat my users as students and collaborators, and they often respond in kind. Your interactions and feedback have made the app what it is today, and those will continue to guide its development. Thank you.
The MoneyReady App is what you wanted. It's your financial planning app, Canada!
Elisabeth Tillier, Ph.D.
President of Money Ready