About this Assignment

Financial institutions and markets affect almost every aspect of our lives. What we buy, where we work, and when we can retire are all influenced by economic activity. In this course, you learned about risk exposure, the basic features of investment vehicles, the application of common financial formulas, and the impacts of regulatory and monetary policies on investments.

For this assignment, you will design an investment plan for an individual based on the individual's retirement plan, risk preferences, current wealth, and future wealth requirements. This investment plan should be at least 1,500 words.

Prompt

You are a financial advisor who regularly educates new clients about how markets and economic systems work to take the mystery and fear out of investing. You've found that when clients understand how things work behind the scenes, they feel more confident in continuing to invest throughout their lives despite whatever doom and gloom they see or hear in the news.

Your latest client is a 32-year-old grocery store manager, married to a 30-year-old woman who takes care of their two children and household. The client wishes to retire at age 60. He has access to a 401(k) through his company, but so far hasn't invested any money. He bought a house last year on a 15-year mortgage and does not expect to move even once he retires. He likes his job and expects his salary to max out at about $75,000 a year. In retirement, he would like to be able to live on 80% of what he was making while working and hopes to have four decades of funded income. He knows he has many years until retirement, and since he anticipates having his house paid off before he retires, he is comfortable with a higher risk in the early years of investing.

For this assignment, you need to design a well-crafted investment/retirement plan that helps the client meet his goal. Your plan should contain at least 1,500 words. Be sure to discuss which combination of asset classes and tax-sheltered retirement accounts you plan to use, and describe how these factors will help meet the client's investment goals. Evaluate each asset class based on their risk and return characteristics and justify their inclusion in the portfolio.

You should also identify ways to mitigate risks and include a detailed assessment of how changes in regulatory and monetary policies could impact performance of the investment portfolio you designed.