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Tool Methodology - Assumptions & Limitations

The tool allows users to customize their risk profile by inputting a starting investment amount, time horizon, and self-assessed risk tolerance; however, this approach is limited because users' subjective assessments may not accurately capture their true risk capacity or align with their long-term financial goals, potentially leading to portfolio recommendations that may not be optimal for their actual financial situation.

The tool’s historical performance and projections assume:

• For each month the user is invested, the investment is compounded by the prior month's ending amount for his selected strategy; however, this approach does not capture intra-month volatility or any mid-month transactions that could affect actual returns.
• Every month the fee is deducted based on the starting amount for the month and this method does not take into account  fluctuations within the month or any additional contributions or withdrawals that would alter the fee base.
  • The fee is based on the actual fee schedule. A fee schedule is defined as a document that clearly explains what services or actions will cost you money, how much you’ll be charged, and when those charges will apply. This assumes the fee schedule remains unchanged over time and may not account for future adjustments or variations in the fee calculation.
  • The fee changes if the investment grows from one bracket to the next (an investment will switch to a new bracket when the investment amount equals or exceeds $100,000)
• The ending amount is equal to the starting amount plus the return, minus any fees. This simplified formula does not account for the potential compounding impact of fees or other real-world factors like taxes or irregular cash flows.
• The ending amount becomes the starting amount for the next month and so on. This assumes no intra-month activity, which may not reflect actual investment behavior.
• The tool does not account for investments made during the month. Consequently, additional contributions or withdrawals are ignored, potentially resulting in performance outcomes that differ from an investor’s true experience.
• The selected risk profile is the same for the entire period; the tool does not account for allocation adjustments, neither automated nor ad hoc. This static approach may not reflect changes in market conditions or shifts in an investor's risk tolerance over time.

No performance information derived from the tool should be taken as a recommendation. Wahed’s investment advice is made available to clients through its digital application.