Alex is 25 years old and he is about to start his first full-time job. He is currently single and he is willing to take the appropriate risk he needs to prepare for retirement. His starting annual salary is $85,000 and he has no retirement savings yet. His employer will match 100% of his contributions up to the first 4% of his salary to the companys 401(k) account.

Part A Annual Savings Use this link to determine his retirement saving needs: http://cgi.money.cnn.com/tools/saveyoung/index.html

1. What amount should Alex should be saving each year? (Use this amount in the Total box.) [2 points]

2. How much of the total annual savings should he be saving in his 401(K), a Traditional IRA, and a ROTH IRA? Put these amounts in the table in the Amount column. [9 points]

3. Why did you pick each amount? Put your explanation in the table next to the amount. Make sure you use concepts from your text, class materials, etc. to justify your position. [9 points]

Part B Investment Vehicle Choices Use FINRAs Fund Analyzer (http://apps.finra.org/fundanalyzer/1/fa.aspx) to look up and compare the funds Alex has to choose from within his employers 401(k) plan. (Keep the defaults and focus on the fees, profits/losses). Alexs employer offers the following 401(k) Investment Vehicle Options a. Davis New York Venture Fund Class Y [DNVYX] b. Aberdeen Select International Equity Fund Class [JIEIX] c. Janus Asia Equity Fund Class A [JAQAX] Alex has the following Traditional or Roth IRA Options d. Target Date Fund e. Apple Stock f. 10 Year Treasury Note g.

Your own choice (you must explain why) 4. Pick the most appropriate choice from the lists above for the investment vehicles.

Then put your choices (a, b, c, d, e, f, and g) in the table. [4 points] 5. Why did you pick each fund? Put your explanation in the table next to the Investment Vehicle Choice. Make sure you use concepts from your text, class materials, etc. to justify your position. [6 points]

Please note that when you finish this table, all the boxes may or may not contain data. It is OK to have N/A or zeros in some of the boxes as long as you provide your rationale. Amount (#2) Why did you choose this amount? (#3) Investment Vehicle Choice (#4) Why did you choose this fund? (#5) 401(k) Employee Contribution: $ Employer Contribution: $ If you decide to invest all or part of the total amount outside the 401(k), choose one of the following Individual Retirement Accounts: