Misc Assumptions

Review and Customize Miscellaneous Assumptions

Navigate to Advisor Portal > Assumptions > Misc to review and update miscellaneous assumptions.

Miscellaneous Assumptions

RightCapital uses the following default miscellaneous assumptions:

These assumptions can be updated globally in the Advisor Portal > Assumptions > Misc tab. Miscellaneous assumptions include:
  1. Cost of purchasing a real estate property: The default of .1% represents costs associated with purchasing a property.
  2. Cost of selling a real estate property: The default of 6% represents typical real estate agent fees associated with selling a property.
  3. Expense adjustment upon the death of a co-client: The default 15% figure represents the reduction in living expenses associated with the death of a client or co-client.

Return Model Assumptions

Model type:

  • Legacy - Our Legacy Monte Carlo simulation model uses stochastic volatility and captures the complex dynamics of equity and bond modeling.
  • Standard - Our Standard model uses the log-normal distribution model, which provides more flexibility when setting asset class returns and volatility assumptions.

Calculation type for Monte Carlo:

  • Arithmetic - An Arithmetic mean takes the sum of the annual return numbers and divides that sum by the count of numbers used. In the Arithmetic calculation, we will adjust the returns by ½ of the investment’s variance, which ultimately results in higher returns for the Monte Carlo scenarios.
  • Geometric - Looks at the cumulative return over a period of time, factoring in the compounding effect of year-over-year returns.

The geometric approach is going to be the default for returns used by each asset class for both straight-line and Monte Carlo projections.

Client-Specific Misc Assumptions

The assumptions can be adjusted client-by-client by opening the plan and navigating to the Gear Icon > Settings > Other Assumptions tab.
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