Bill and Angela Thomas, age 56 and 58, just inherited $200,000 from a distant relative. They are now trying to assess how to invest the proceeds.

Time Horizon - 5 years to retirement and projected normal retirement lifespan to age 90

Risk Tolerance - Medium

Financial Situation:

• $100,000 in savings (RSPs and TFSAs)
• No pension plans, heavy debt burden ($600,000 mortgage @ 2%)
• Combined income of $100,000/year
• No emergency funds
• Cash Flow is tight each month

Family Situation - no children, ailing parent to support and lives in their house

Investment Knowledge - low, and they generally prefer managed products

 

1. Build a suitable Investment Portfolio (Asset Allocation and Product Level). Indicate the account types that you would recommend and allocate the $ accordingly (i.e. RRSP, TFSA, etc.).
2. Provide Rationale as to why you recommended what you recommended and show your client proposal report.
3. Pick a suitable index to measure your performance over the past few weeks. Which index did you pick and why? Track your performance against the benchmark for at least 2 weeks.
4. Outline your key learnings
5. Include any relevant course material that supported your team in making their decisions (i.e. beta, standard deviation, alpha, tactical asset allocation, EPS, P/E, etc.)