Due in large part to the dramatic losses in 401k’s, IRA’s and other retirement accounts in the past year, many Americans are starting to question whether the tools they’ve trusted to calculate and balance their retirement portfolios were broken, inadequate or simply outdated. And in response, software companies are rolling out a host of new products in hopes of better predicting the savings needs of families and the potential risks associated with investing.
Most retirement calculators generally use an average rate of return to determine how much you’re saving and need to save each year, month and day in order to meet your goal. Even the highly touted Monte Carlo, a program that calculated the probability that savers would reach their retirement goal in a variety of scenarios based on investment period, amount, and types, was inadequate in predicting the halving of people’s retirement accounts this year.
But while not all investment experts agree on the usefulness of investing software, many agree that investor knowledge is the most important aspect to growing your money. That’s because while you can rely on simulations, there is nothing that beats understanding your investment and the associated risks. And in order to grow your retirement accounts, you actually have to be funding it despite market conditions.
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