Thursday, April 23, 2015

Merrill Edge Net Worth Calculator

Merrill Edge has a Net Worth Calculator  - it is worthwhile using?

As I have noted time and time again, you have to calculate your net worth fairly frequently and then think about every financial transaction in terms of how it will affect your net worth.  Of all the "gauges" of your financial situation, your net worth is the most important.  Yet most people are flying blind, with regard to their net worth - looking at life in terms of monthly payments only.

I use a simple WORD document with a spreadsheet table embedded, to calculate net worth.  I can enter the values of each account or asset and then it totals up the sum (subtracting debt, if any).  It is a little cumbersome, but worthwhile doing.   You could just use a pen and paper.

I always envisioned that some day in the future, you could look at your smartwatch and it would display your net worth in real time.  When you went to work, it would go up.  When you take a break and buy lunch at a restaurant, it would go down, like an electric meter keeping track of energy used.   If people could see this in real time it would really make them think about consumption.  But it is funny, the electric company doesn't want you to be looking at your meter in real-time, and I guess our retailer overlords wouldn't like you to monitor your net worth in real time, either.

Merrill Edge has an online net worth calculator.  This is sort of like MINT in that in order to use it, you have to give the folks at Merrill your usernames and passwords to all of your accounts.   If they get hacked, well, you're toast.   Oh, sure, they encrypt everything and all, but still - is it worthwhile handing over the family jewels to get a number you can calculate yourself?

Well, I thought I would try it, and it works, kinda sorta.   Most accounts import (particularly those from Bank of America or Merrill).  But accounts that are more paranoid about security (Computershare, NMFN, State Farm) either won't let Merrill in, or won't let them in more than once (they keep asking the security questions, and the Merrill platform is set up to answer only one security question).

So, some accounts, you have to manually enter the balance on the account.  Others will log in, once, and then give a "failure" message when it tries to update.   And when you go to the "manage accounts" page, there is no way to update the security questions - it just gives you a spinning wheel and then bombs out.  The only way to fix this is to either delete the account and re-enter it (and let it bomb out again) or covert it into a manually entered data amount.

Once nice feature is that Real Estate can be entered and it will calculate property values based on Zillow.   The values seemed pretty close.  I had estimated our house being worth $400,000 but Zillow says $365,000 and when I looked at comps online, they may be closer to reality.   The condo, they valued at $135,000 which seemed high (based on a recent appraisal of $120,000) or could be too low (based on a buyout offer of $175,000).

Like anything else, sometimes there is a fudge factor.

You can also enter "other assets" like your cars and personal property if you want.   All in  all, it calculated a pretty accurate net worth that was only off by about $100,000 from my calculation (about 5%) and that has more to do with the real estate valuations than anything.

Sadly, since so many accounts  "bombed out" after the first use, it does not seem like a useful tool for calculating net worth in real time.  They also have a "budgeting" feature, which is like MINT in that it tries to use your credit card purchase data to determine how much you are spending on groceries, restaurants, etc.    If you pay a lot of bills online or use cash a lot, this is less than helpful, as the pie chart just shows "checks" as your biggest expense.

Since I enter all my expenditures into Quickbooks, I can find more accurate data there.

So, maybe my Science Fiction idea of a real-time net worth calculation is still a ways off - maybe decades.   And frankly, there is no financial motivation to provide one.  Retailers don't want you thinking about your Starbucks purchase in terms of how it affects your net worth.   Bankers, well, maybe they might want you to save, but they don't see the connection between the product and sales of investment products.   So, such net worth calculators will always be under-coded and under-funded.

It was an interesting experiment.  Not excuse me, as I have to go change all the passwords on all of my banking and investment accounts.....