projected value, projected monthly savings and projected term calculators aim to help advisers show investors future savings scenarios
Merrill Lynch Investment Managers has launched a series of three online tools to help investors and their advisers to model future savings scenarios.
The tools, which are available on the group's website at www.mlim.co.uk/uksite/fund-centre/projection_tool.asp, have been created to deliver projections and illustrations of how long it would take an investor to achieve their goals by saving at different rates into Merrills' unit trusts.
There are three tools on the website: the projected value calculator, the projected monthly savings calculator and the projected term calculator.
The projected value calculator works out the projected value of regular savings plans into individual unit trusts in the group's range, as well as the growth of lump-sum investments.
The results are based on different projected levels of growth prescribed by the FSA, with all income reinvested. The three levels of growth are 4%, 6% and 8%. The calculator also carries a health warning that tells users that the figures projected are not guaranteed and the investor could receive more or less than the calculated figure on maturity.
For example, if a savings term of five years is taken, with a £5,000 initial lump-sum investment into the Merrill Lynch American Fund as well as £100 monthly savings, projected cash values generated by the calculator are £11,300, £12,200 and £13,100 for the growth rates of 4%, 6% and 8% respectively.
The projected monthly savings calculator is designed to help investors work out how much they should save each month in order to achieve a fixed sum, perhaps for the repayment of an interest-only mortgage or to meet school fees at a fixed future date. As with the projected value calculator, the results are based on the three FSA projected growth rates of 4%, 6% and 8%.
For example, an investor who wants to save £500,000 through the Merrill Lynch Balanced Portfolio fund, based on a savings term of 30 years with an initial lump sum of £38,100 would need to save a projected £934 per month if the fund achieved projected growth of 4% per annum during the savings term.
Using assumed growth rates of 6% and 8% the monthly savings level needed to reach a lump sum of £500,000 during the 30-year period falls to £627 per month and £389 per month respectively.
The third tool, the projected term calculator, calculates how long it would take to achieve a specific savings goal based on various levels of regular savings. Take the example of an investor aiming to save £20,000 beginning with a lump sum of £2,410 and a regular savings rate of £50 a month. The projected term calculator suggests it will take such an investor 23 years and six months to save that sum into the Merrill Lynch UK Income Fund based on a projected growth rate of 4%. The length of time needed to save that amount falls to 19 years and four months when basing calculations on the 6% projected growth rate and to just over 16 years based on the 8% rate.
Despite improved risk appetite
FOS award limit increase
Relates to 136 million transaction reports
Ceremony will take place 13 November