Getting The Right Data For Equity Rate (Er)

Data Needed to Calculate Equity Rate (Er)

Include Personal Cash – Because Equity Rate measures the total amount of risk a client is taking in their investable assets, Elements includes personal cash as an “investable asset.” It would be inappropriate to isolate a measure of equity exposure just to the invested accounts and not to the full available investable assets.

Example: A client has a 401(k) valued at $100,00 with an equity ratio of 80-20, and they also have $100,000 of personal cash in their bank account. Including the personal cash would make the Equity Rate 40%

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