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- 4 0 1 K project ( use Excel, do not use chat bots as their calculations are inaccurate ) Use the following assumptions: Starting
K project use Excel, do not use chat bots as their calculations are inaccurate
Use the following assumptions:
Starting salary $
Nominal salary annual growth rate note this is a change
Employer matching of salary
Investing period years age to
Capital Markets Expectations CME:
Estimated equity market returns
Estimated bond market returns
returns
Questions:
Solve for the required pretax savings rate for success Success is based on standard financial planning theory that you need to have x your final salary at retirement to not outlive your savings.
Calculate in $ terms the cost of waiting years to begin investing in your k ie how expensive is being disorganized? Hint: your salary will have grown during the years you delayed getting your act together.
Calculate the $ value of not focusing on fees, expenses and managing behavioral finance issues. To calculate this use the differential between the average investor returns and the actual performance: What critical financial concept is at play here?
Calculate the $ value differential of using a glidepath strategy instead of a fixed allocation. For the glidepath assume the heuristic: your year equity allocation and reducing per year for years. This will require you to calculate a new rate of return assumption using our equity and bond CME estimates every year
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