Overview:

NBK Capital SmartWealth provides allocation and savings advice alongside a projection graph where customers view their goal projection under “Goal.” The graph is intended to show the possible future investment values in order to illustrate the impact of different contribution and withdrawal choices, investment time horizons, and portfolio allocations. Actual individual investor performance has and will vary depending on market performance, the time of the initial investment, amount and frequency of contributions or withdrawals, intra-period allocation changes and other factors.

An indication of “On Track” is not a guarantee of achieving a goal in the future. Acting on savings and withdrawal advice is not a guarantee that goals will be met or that the investment will meet cost of living needs throughout one’s life.

We have highlighted below our methodology and assumptions for each component under “Goal” in an NBK Capital SmartWealth goal-account.


Projection Methodology and Assumptions:

  • The expected portfolio returns used in the projection are based on the associated investment plan and allocation. Each risk profile and investment product has a different expected return profile. Expected returns are based on internal calculations reflecting the past performance of the underlyings over a prolonged period. Past performance, actual or simulated, is not a reliable indicator of future results.
  • The returns used are net of the NBK Capital SmartWealth fee of 1.25%, and assumes that fee holds throughout the investment.
  • We project your balance in increments based on your indicated deposit frequency. If there is is no indicated deposit frequency, balances are projected in annual increments.
  •  All contributions or withdrawals, if specified, are assumed to be made at the end of the month.


Graph Explanation:

The graph exhibits the possible range of projected portfolio values using color:

  • The dark line indicates the projected portfolio value under average market conditions (differs per investment type). This means that there is a 50% likelihood of portfolio values greater than this, and a 50% likelihood of portfolio values less than this.
  • The lighter, shaded region indicates the range within which there is 80% likelihood of the projected portfolio value. This means that there is a 10% likelihood of portfolio values greater than the top of this region, and a 90% likelihood of portfolio values at least as high as the bottom of this region.


Goals Status:

The NBK Capital SmartWealth Goal Tracking tool constantly tracks the portfolio performance and indicates the ability of the portfolio to reach the Goal target, assuming average market performance. The portfolio performance is categorized as “On Track” or “Off Track”, and SmartWealth makes recommendations to increase the likelihood of reaching the Goal target. The portfolio performance is “On Track” when the total projected portfolio value exceeds the Goal target assuming average market performance. This is equivalent to a likelihood of 50% and above of reaching the Goal target. The portfolio performance is “Off Track” when the future projected portfolio value (i.e. current balance plus future contributions, plus investment growth) is not sufficient to reach the Goal target assuming average market performance. This is equivalent to having less than 50% likelihood of reaching the Goal target. 


Our Recommendations:

NBK Capital SmartWealth provides advice for bringing the goal back on track in three areas – either increasing the amount of future quarterly contributions, or increasing the term of the investment or increasing the current balance in the account by making a one-time deposit. These recommendations are based on a 50% likelihood of projected portfolio value to reach the Goal target.


Limitations:

  • The Goal Tracking model is based on past performance data, which is not a guarantee of future investment returns.
  • Inflation and other nominal impacts are not taken into account within the simulation.
  • The model does not account for skipped payments. A new simulation is triggered once a payment is skipped.
  • Extreme market situations and force majeure events are not captured in the model and can cause for projections and actual returns to differ.

To read more information about the rewards and risk of investments, click here.

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