Classic Computer Magazine Archive COMPUTE! ISSUE 168 / SEPTEMBER 1994 / PAGE 38

Get rich quick! (personal finance, investment and retirement-planning software; includes related information about tax preparation software) (Buyers Guide)
by David English

Catchy title, huh? Now you expect me to tell you how to make a pile of money in practically no time at all. Well, I'm going to tell you how to make a lot of money - and it's a sure thing - but it will take some years for it to work. On the other hand, because you'll be doing it the slow, proven way, your chances of success are virtually assured. But first a few facts.

The first fact is about you: You're not saving enough money. I don't care if you're 20, 40, or 60, making $15,000, $55,000, or $155,000 a year - it's almost certain that you're not saving enough. I've read that most people in the workforce are only saving at about 30 percent of the rate of previous generations. It's time to wake up. Who do you think is going to pay for your first house, your kid's education, and your retirement? Your parents and grandparents learned to save, and you can, too.

I know - you're not making enough money now to save anything. Maybe later. Sorry, but it doesn't work that way. The longer you wait, the harder it will be to save those large sums of money. If you save $1,000 each year for 40 years and get a return of 10 percent each year, you'll have $486,851.81. If you wait 10 years to start, you'll have $180,943.42 in 30 years. But if you wait 30 years to start, you'll only have $17,531.17 in 10 years. While $17,531.17 may sound like a fair piece of change, it shrinks to a pittance when you factor in inflation and taxes.

That's it for the sermon - you get the idea. So what can you do? Get money smart and do it right away - while you can still make a big difference. Since you own a computer, one of the best things you can do is use your computer to help you save money. And that brings us back to the focus of this article. To help you save the money you'll need later in life, we'll look at three categories of money-smart software. * Personal finance programs * Investment programs * Retirement-planning programs

With the help of these software packages, almost anyone can become more financially secure.

Calling in a Specialist

Personal finance programs grew from what used to be called checkbook programs. Today, these programs do much more than help you balance your checkbook. They can balance multiple checkbook and credit card accounts, let you pay your bills electronically, track a portfolio of investments by downloading the latest prices from an online service, remind you to pay recurring monthly bills, let you access your bank accounts online, send your financial information directly to your tax program, and help you plan for your retirement. If you're just starting to put your financial house in order, there's no better place to start than with a personal finance program. By tracking and categorizing your spending, you can cut your expenses enough to start saving some money each month.

The best-selling personal finance program is Quicken, which comes in three versions for the PC: Quicken (which is DOS based), Quicken for Windows, and Quicken for Windows: CD-ROM Deluxe Edition. Version 7 of Quicken for DOS and version 3 of Quicken for Windows share a similar feature set. Both have a Getting Started Guide and Qcards to help you begin the process of entering your financial data. Both let you type in a few characters of repetitive data and have the rest fill in automatically; both include graphs that let you understand visually where your money goes; and both can track checks, bills, bank accounts, credit card accounts, investments, loans, and savings budgets. The most recent versions include a stronger home inventory module, beefed-up financial-planning tools, and better investment tracking.

An add-on package for Quicken for Windows, called Quicken Companion ($34.95), features a tax estimator that you can use throughout the year; a stock price quote module that lets you go online to track your investments instantly; and a tips, tricks, and shortcuts section that can help you delve deeper into the program. Quicken for Windows: CD-ROM Deluxe Edition includes both Quicken for Windows and Quicken Companion, as well as The Wall Street Journal Video Guide to Money and Markets - CD Version (which helps you learn about different kinds of investments), The Wall Street Journal Personal Finance Library (which provides answers to common financial questions), Tradeline Electronic Stock Guide (which contains one-page snapshots of over 6000 stocks and market indexes), electronic versions of 20 U.S. government publications that cover various aspects of personal finance, and the manuals for both Quicken for Windows and Quicken Companion in electronic form. I think it's fair to say that the CD-ROM version of Quicken is the single best personal finance program available.

While Quicken is the best all-around personal finance package, there are other strong packages that have developed their own special strengths. Managing Your Money has always been the leader among the personal finance programs in managing investments. The current versions of the program are Managing Your Money: 1994 Edition for DOS and the new Managing Your Money for Windows.

Like Quicken, Managing Your Money can track your income and expenses, pay your bills electronically, categorize your spending, and print your checks. However, Managing Your Money: 1994 Edition for DOS goes further than Quicken in helping you with your taxes (by including a data-linked Form 1040 and Schedules A through F), tracking your investments (by providing an Asset Allocation Module, a Rental Properties Module, a Life Insurance Organizer, and more), and helping you plan for your retirement (by incorporating a Social Security Estimator, tracking your net worth history, and providing useful tools to help you reduce your debt burden). If a rigorous set of financial tools is more important than the superior ease-of-use features you'll find in Quicken, you should consider choosing Managing Your Money.

Microsoft Money 2.0 also offers the usual account tracking, electronic payments, spending categorization, simple investment tracking, automatic data filling to help eliminate repetitive data entry, and a variety of reports with charts and graphs. In addition, Money has two unique features. The first is online banking, which lets you use your PC to view your bank and credit card account records and even transfer funds between accounts. (Unfortunately, you can't make cash withdrawals to your computer's printer.) Currently, this outstanding feature can only be used with three regional banks (First Chicago Bank, Michigan National Bank, and U.S. Bank), though Microsoft is working to add other banks by the end of the year. The second unique feature, at least for a personal finance program, is Microsoft Wizards, a set of interactive templates found in several Microsoft packages. In Money, the Wizards make it much easier to calculate a loan, plan a mortgage, estimate interest, and calculate savings.

Kiplinger's CA - Simply Money 1.5 (Computer Associates, 800-225-5224, $39.95) should be shipping by the time you read this. Like the other personal finance programs, it tracks various kinds of accounts, prints checks, lets you pay bills electronically, and generates dozens of reports. This latest version beefs up Kiplinger's Financial Advisor (with three times the advice found in version 1.0), adds three financial calculators (Adjustable Rate Mortgage, Life Insurance, and College Costs), and offers improved check printing.

MoneyCounts for Windows offers the usual set of checkbook and electronic payment features, as well as a choice of five predefined sets of income and expense categories (home, business, farm, church, and rental property), a plain-English accounting guide, and a built-in Address Book/Mail List Manager. The program has a strong reports section that includes 22 predefined reports and more than 30 different 3-D charts and graphs.

Is it really worth the trouble to maintain a personal finance program by regularly typing in your checkbook and credit card information? To begin, you could go back 6-12 months and put the data in after the fact. Then you would be able to run reports immediately and see the patterns in your spending and income. It took me seven hours to enter all of my financial data for the last eight months, but the time was worth it for me. The other strategy would be simply to begin with the next set of statements that comes from the bank and take it one month at a time. With this method, it would be months before you'd be able to run most of the useful reports, but the task wouldn't seem so daunting. Either way, you'll find that with each new month the value of your program will continue to grow. If you've ever wondered where all the money goes, here's your chance to find out.

Decisions, Decisions

You've used your personal finance program to tame your wild spending habits and have even begun to put some savings away each month. Then you discover that the banks don't pay much interest on savings accounts, and you think you may be ready to put a portion of your savings into more rewarding investments.

For general financial advice, you might turn to Charles J. Givens Money Guide. Givens offers advice from his three best-selling books, Wealth Without Risk, Financial Self-Defense, and More Wealth Without Risk. There is a CD-ROM version as well as a floppy-based Windows version. Both versions contain over 70 financial applications, worksheets, and figures; over 800 answers to financial questions; and a financial section with 17 custom tools. The CD-ROM version adds 130 video clips of Givens presenting his financial strategies.

If you plan to do your own research, there are a number of online advisory and financial data services. One of my favorites is the Investor's Forum (type GO INVFOR) on CompuServe. There you'll find hundreds of investment-oriented programs you can download, an active message area that's open to all (novices as well as experts), and many speciality sections, such as an area devoted to users of MetaStock (more about MetaStock shortly).

Over on America Online, you can access the latest facts and figures on hundreds of mutual funds in the Morningstar Mutual Funds area (keyword: Morningstar). This respected publisher of mutual fund newsletters is putting the essential information from its newsletters online, including an overall rating, risk rating, and purchasing data for each mutual fund. While there are no guarantees that past performance will match future performance, Morningstar can give you a head start on picking the best mutual funds.

Almost all of the major online services, including Prodigy, DELPHI, GEnie, Dow Jones News/Retrieval, Telescan, CompuServe, and America Online, offer financial data that can help you learn about your investment options and select the investments that are best suited for your individual needs.

If you're a Quicken user, you ought to check out the Windows-based Reuters Money Network Version for Quicken Users. It plugs you and your Quicken data into a dedicated financial online network. You'll be able to access online data on 18,500 investments, including CDs, mutual funds, stocks, bonds, and indexes; create an online personalized news clipping service; and analyze your Quicken investment portfolio to determine which investments are making money, which investments are losing money, and where you should invest next. The software package includes one free month of online membership, with additional access starting at $9.95 a month. Reality Technologies also offers a similar DOS package, called Reuters Money Network, which doesn't offer the Quicken links but does include an investment portfolio manager (the Quicken version uses Quicken's own portfolio manager).

WealthBuilder has one foot in the investment-planning camp and the other foot in the retirement-planning camp. The two go hand in hand, so combining them into a single program makes a lot of sense. WealthBuilder begins by asking you questions about your net worth, risk tolerance, and investment preferences. It then creates an investment strategy that you can use as your financial plan. The program is heavily weighted toward mutual funds and asset allocation, though many financial planners would recommend a similar strategy for long-term savings. You also get a built-in portfolio manager and a copy of Reuters Money Network. in addition, the program can import portfolio and budget data from Quicken, Managing Your Money, and other personal finance programs.

If you're really serious about analyzing stocks and mutual funds, you should take a look at MetaStock 4.0, the top technical-analysis program. While fundamental analysis studies the financial data for an investment, technical analysis limits itself primarily to the price movement of an investment, in an attempt to predict future price swings.

Thousands of individual investors use MetaStock each day to analyze the price movement of their investments, using such esoteric technical tools (called indicators) as Japanese. Candlesticks, Relative Strength Index, Volume Rate-of-Change, Bollinger Bands, and Time Series Forecast. They also draw lines to extend price patterns, using equally strange methods, such as Fibonacci Retracements and Gann Fans. Does technical analysis really work? It seems to help predict whether an investment is likely to go up or down, and when it's combined with fundamental analysis to select the investments, an individual investor can increase his or her odds of beating the market. (Stocks, by the way, have increased over the long term at about 10 percent a year. This is why the stock market has traditionally been a great place for long-term investment.)

In addition to creating charts and letting you analyze them with an array of indicators, MetaStock provides three outstanding features: Custom Formulas, The System Tester, and The Explorer. With Custom Formulas, you can have as many as 250 different custom formulas, either ones you create yourself or ones you download from places such as the investor's Forum. With The System Tester, you can combine one or more indicators into a trading system and test that system against the historical data for an individual security. You can then optimize your trading system to improve the results. With The Explorer, you can perform in-depth analysis on multiple securities across multiple directories and generate a performance report that ranks the securities according to your analysis.

Nirvana Systems has a terrific series of add-on products for MetaStock, including four volumes of trading systems that you load directly into MetaStock ($49 each, $79 for any two, or $149 for all four); a set (called Journeys!) of explorations and templates that let you quickly display the results of each run of The Explorer; and four utility packages that make it easy to find the best trading systems for your particular investments. A basic package with the first volume of trading systems and the three most popular utility package is $169, or $390 when purchased with MetaStock 4.0.

Windows on WallStreet 2.1 is similar to MetaStock in that it lets you perform technical analysis on stocks, bonds, mutual funds, commodities, and indexes using a variety of indicators. You can even import MetaStock price data and custom indicators. It also features a profitability tester similar to MetaStock's System Tester and a SmartScan feature similar to MetaStock's Explorer. Windows on WallStreet improves on MetaStock by including context-sensitive help, a built-in module that lets you automatically download price information (currently supporting CompuServe, GEnie, Dow Jones News/Retrieval, and Dial/Data), and a built-in communications program that lets you research company financial information (for fundamental analysis). Until Equis's long-awaited Windows version of MetaStock arrives later this Windows on WallStreet is clearly the Windows technical-analysis program to beat.

Mighty Oaks from

Acorns Grow

Let's assume that you've used your personal finance program to learn how to save and you've explored various investment options. How will you know when you've saved enough? How can you save for a house, your kid's education, and a comfortable retirement if you don't know how much to set aside each month and how much that money will grow over the years?

Most personal finance programs have a simple module that lets you quickly figure how much you might need to save, given your goals and current financial circumstances. But for a true estimate of what it will take, you'll need a dedicated retirement-planning program. A dedicated program can account for income that varies each year, determine if you'll have to sell assets to eliminate any yearly shortfalls, and let you perform elaborate what-if scenarios, such as how the year you retire would affect the amount you need to save, how a change in the tax rate would affect your retirement income and Social Security, and how higher inflation would cut into the buying power of your retirement funds.

Rich and Retired is a full-featured retirement-planning program. It can handle assets that you plan to buy in the future, calculate how your assets and taxes will change if you inherit property, factor in the percentage of your assets that can be sold to support your retirement, and automatically adjust your yearly savings rate to keep up with inflation. Retirement reports include Yearly Shortfall Report, Yearly Cash Flow Summary, Yearly Overview, Detailed Report for Specific Year, and Lifetime Overview. Fortunately, this Windows-based program is relatively easy to use and has an extensive help system. Once you've entered the data - which is no small feat if you want to get the full benefits of the program - you can quickly view the effects of any changes on your projected net worth.

Two other retirement-planning programs, both DOS based, are RetireASAP and Destiny. RetireASAP produces a number of useful reports, including Overview Report, All Income - Non-Investment: Now and During Retirement, and Year-by-Year Contributions Guide. The program also includes an online investment guide, called The ABC's of Investing. A Windows version should be available by the time you read this. Destiny, developed by MacKenzie Systems but sold through Comtrad Industries, includes a built-in portfolio manager and retirement-planning workbook. The 65-page workbook is an excellent introduction to tax-deferred savings, investment diversification, inflation-adjusted savings, risk management, and asset allocation.

>From Here to There

The time to think about the future is now. Save money, invest intelligently, and take the opportunity to learn the secrets of money management from the experts. That's it. With the help of these programs, you could soon be on your way to a more financially secure future. They're designed for nonaccountants like you and me, so don't feel you won't be up to it. You will have to think about what you want out of life and spend some time organizing your financial data. But once that's over with and you see the results, you may well agree that buying money-smart software is one of the best investments you could ever make.

Death and Taxes

The two things you can't avoid are death and taxes. However, you can make both easier to live with (so to speak) with specialized software programs.

Most tax programs - such as Intuit's TurboTax, MECA's TaxCut, and Parsons Technology's Personal Tax Edge - can import your relevant income and expense data from most personal finance-planning programs. For example, Managing Your Money: 1994 Edition for DOS can export data for Form 1040 and Schedules A-F, while WealthBuilder can export data for Schedules B and D. Unless your taxes are overly complicated, you should consider doing your own taxes each year with the aid of a computer programs, as the process of doing your own taxes can help you later in your financial planning.

No one likes to think that he or she will die unexpectedly, but it happens. Now that you've used your personal finance, investment, and retirement-planning programs to figure what your assets are worth, you might as well go the whole distance and figure who gets your stuff when you're gone. WillMaker 5 (Nolo Press, 510-549-1976, $69.95) is the leading will-writing program, and the wills it creates are valid in every state except Louisiana. Even if you have only a few valuable assets, a will can make the legal process much easier for those you leave behind.

Money Smarts

America Online (800) 827-6364

RetireASAP - $103.00 Calypso Software (800) 225-8246

CampuServe (800) 848-8199

Kiplinger's CA - Simply money 1.5 - $39.95 Computer Associates (800) 225-5224

Destiny - $99.00 Comtrad Industries (800) 992-2966

Rich and Retired - $59.95 Data Tech Software (800) 556-7526

MetaStock 4.0 - $349.000 Equis International (800) 882-3040

Charles J. Givens Money Guide (CD-ROM Edition) - $59.95 Charles J. Givens Money Guide (Window Edition) - $49.95 Friendly Software (419) 868-6090

Quicken for Windows: CD-ROM Deluxe Edition - $124.95 Quicken for Window 3 - $69.95 Quicken 7 - $69.95 Intuit (800) 624-8742

Windows on WallStreet 2.1 - $149.95 MarketArts (800) 998-8439

Managing Your Money for Windows - $79.95 Managing Your Money: 1994 Edition for DOS - $79.95 MECA Software (203) 255-1441

Microsoft Money 2.0 - $34.95 Microsoft (800) 426-9400

Nirvana Systems (800) 880-0338

MoneyCounts for Windows - $49.00 Parsons Technology (800) 223-6925

Reuters Money Network - $49.95 Reuters money Network Version for Quicken Users - $24.95 WealthBuilder - $109.95 Reality Technologies (800) 346-2024