Step 1: Navigate to My Plan > Accounts and Assets and press Savings

Step 2: At the bottom of your listed accounts, press Add an Account

Step 3: Toggle to "Taxable" and select Investments/Savings/Checking

Step 4: Choose if you would like to link the account or manually enter the account info

Step 5: Enter a descriptive account name so that you may easily identify the account in charts and pull down menus

Step 6: Enter the current balance of the account

Step 7: Select Ordinary Income as the tax treatment

Step 8: Enter the optimistic and pessimistic rates of return

Step 1: Navigate to My Plan > Accounts and Assets and Press Savings

Step 2: At the bottom of your listed accounts, press Add an Account

Step 3: Toggle to "Taxable" and select Investments/Savings/Checking

Step 4: Choose if you would like to link the account or manually enter the account info

Step 5: Enter a descriptive account name so that you may easily identify the account in charts and pull down menus

Step 6: Enter the current balance

Step 7: Select Capital Gains as the tax treatment

Step 8: Enter the cost basis

Your cost basis is the the total amount you paid for all the holdings in your account. It is the original investment amount for tax purposes. This is usually the purchase price, adjusted for stock splits, dividends, and return of capital distributions.

Your institution will offer a variety cost basis methods, and your institution will track your cost basis for you. Each asset you purchase will have a cost basis, but your institution should also aggregate your cost basis for each account for you as well.

Step 9: Enter the turnover rate

Account turnover rate is the percentage of your account that gets traded on an annual basis resulting in realized gain/loss events.

Capital gains are not taxed until they are realized, and this isn’t an issue in your retirement accounts (they have zero cost basis.) Gains in after-tax accounts are taxed at preferential or lower capital gains rates and not ordinary income tax rates. The brackets are 0%, 15% and 20% and depend on your taxable income. You may incur capital gains taxes in a taxable account, when you 1) sell shares, and when 2) there is internal buying and selling in the account. You may enter a turnover rate to account for internal buying and selling in the account.

The tool will take the account balance and cost basis, realize the turnover rate as gains, and tax the gains at your long term capital gains rate. If you are a passive investor, holding ETFs or index funds, the turnover rate will be low or negligible. If you have a managed portfolio, managed fund, or trade frequently the turnover rate will be higher, possibly 10% or more.

The turnover amount is then added to the cost basis in the projections.

How do you calculate your Turnover Rate?

You’ll find the annual capital gains distributions on your 1099 DIV and/or IRS Form 1040. Divide the annual capital gains distributions by the prior year-end account value to determine the annual turnover rate

Example: capital gains distributions $3,000 ➗ $100,000 Account Value ＝ 3% Annual turnover rate.

Step 10: Enter the optimistic and pessimistic rates of return

The Boldin software does not model any specific assets such as individual stocks, bonds, mutual funds, ETFs, bonds or cash and you have the ability to model your asset allocation (which is the percentage of equities and fixed income you have in each account) by entering optimistic and pessimistic rates of return.

Enter nominal rates, do not adjust for inflation. The higher the optimistic rate of return, the more variability you’ll see in the Monte Carlo and vice versa.

Step 11: Enter the dividend yield

Enter the percentage of the stock’s price paid annually as dividends. The yield should be included in your total return for the account.

For example:

Your total average annual return is 6%, consisting of 4% capital appreciation and 2% dividend yield

Rate of Return: Enter 8% optimistic and 4% pessimistic

Dividend Yield: Enter 2% for the annual dividend yield (we do not allow for optimistic and pessimistic dividend yield)

By default, dividends will be reinvested which will increase the balance and the cost basis of the account in your plan projections. They will also be assumed to be qualified dividends meaning any associated capital gains tax will be included in your capital gains tax modeling each year as per IRS regulations.

To learn more about the dividend feature, please see this article.

If you wish to model a dividend income stream, please see this article.