IF YOU'RE AN INVESTOR -- serious or otherwise -- there are hundreds of computer programs on the market designed to help you.
Some are little more than stock price trackers and portfolio databases. Others are sophisticated investing tools, allowing you to link up with on-line databases to retrieve the latest information and even buy and sell.
For those who see investments as the key to long-term security, it would be hard to find a better investment than Wealth Builder by Money magazine.
This $249.95 program from Reality Technologies is a superb package that helps you organize your financial life. It will help you develop a coherent investment strategy tailored to your income, age, lifestyle and financial goals.
Wealth Builder combines a database of stocks, bonds and mutual funds with a variety of tools that allow you analyze your current financial status, figure out where you're headed and choose the right financial instruments.
Although experienced investors will appreciate Wealth Builder's underlying sophistication, the authors don't assume that you're a stock market expert. They assume only that you're intelligent enough to want to make the most of your money. They'll teach you the rest.
A readable manual, detailed help screens and one of the best on-line tutorials I've seen take you through the program step-by-step. They tell you what securities are, how they're traded, the pros and cons of various investments and how to analyze risks and yields.
Version 1.1, which I tested, requires an IBM-compatible computer with 512K of memory. While you can run it from floppy disks, the size of the database makes a hard disk eminently desirable, if not a necessity.
You'd better have plenty of hard disk real estate available. Out of the box, the program and data files (500 stocks, 500 bonds and 500 municipal funds) take up 4.5 megabytes of space. If you subscribe to the full package of quarterly updates, you'll need a whopping 13.5 megabytes.
Wealth Builder starts by building a detailed personal profile. The information includes your age, income, savings accounts, investments, cash, other assets, debts and ongoing expenses. The result is a balance sheet that shows everything in an understandable format, including your net wealth.
This can take a while. I had never tried to put this information together in one place, but it's well worth the effort, even if you never invest another penny.
During this part of the process, you learn a bit about the program's portfolio manager, which records purchases, sales, stock splits, and dividend distributions. By itself this is a useful tool, but its integration with the rest of the program multiplies its power.
Wealth Builder can also import data from Quicken and Managing Your Money, the two most popular personal finance programs on the market.
Once you know where you are, you tell Wealth Builder where you want to go by setting up one or more objectives, such as retirement, a home purchase or college education.
Detailed worksheets make this relatively easy, but the analyses are quite sophisticated. For example, you can decide how much of your prinicipal you're willing to deplete during retirement, change the projected rate of inflation and adjust the program's assumptions about life expectancy. All of these changes have profound effects on the amount you'll need to accumulate through savings and investment.
You can also assign some or all of your current investment portfolio to your objectives, which likewise changes the amount you need to accumulate.
Knowing what you have and what you need, it's time to develop an investment strategy. The first step here is to determine how much risk you're willing to take, on a scale of 1 to 5. Generally, the younger you are, the more risk you can afford.
Wealth Builder then calculates an optimized portfolio outline based on a technique known as asset allocation. This mixes investments from various types of assets such as equities (stocks and stock mutual funds), bonds, precious metals and cash. Used by professional portfolio managers, asset allocation is designed to maxmize growth while keeping the risk as close to your personal preference as possible.
The program shows how your assets are allocated now, and shows how much you should switch to other types of assets. Then it's time to go shopping using the program's securities database.
The stock and bond databases are new to this version. Previously, Wealth Builder concentrated on mutual funds. But it's obvious that the authors still believe that mutuals offer the best combination of safety and return for the small investor, despite the fact that they underperformed the general market during the go-go years of the '80s.
The databases with the version I received were only updated through the end of 1989. When you register your program, you get disks containing the latest quarterly information. Update plans are available at extra cost (see the accompanying box).