Case Study The twins are now 3 years old and Jamie Lee and Ross, both 38 are finally beginning to settle into a regular routine They have been discussing their future and determine they need to save $150,000 for college in 15 years, and they also dream of owning a beach house in their retirement which could be another $350,000 thirty years from now They are wondering of this is all possible Current Financial Situation Assets Checking account $4,500 Savings account $20,000 Emergency fund savings account $21,000 IRA Balance $46,000 Car $8,500 (Jamie Lee) and $14,000 (Ross) Liabilities Credit card balance $4,000 Car loans $2,000 Income Jamie Lee $45,000 gross income ($31,500 net income after taxes) Ross $80,000 gross income ($64,500 net income after taxes) Monthly Expenses Mortgage $1,225 Property Taxes $400 Homeowner's Insurance $200 IRA contribution $300 Utilities $250 Food $600 Baby essentials (clothing, toys, etc ) $200 Gas maintenance $275 Credit card payment $400 Car loan payment $289 Entertainment $125 Directions Read the above case study and answer the questions below Upload your work to Canvas by the deadline Questions Using the formula in Chapter13 for determining the amount of growth investments investors should have and considering that they are both 38 years old, how much of Jamie Lee and Ross's assets should be allocated to growth investments How should the remaining investments be distributed, and what is the risk associated with each type of investment Jamie Lee and Ross feel they can budget $5,000 per year in a savings program for future college expenses for their twins They expect an average annual return of 7 percent on that investment If their twins start college in 15 years and they want to have $150,000 saved ($75,000 for each child), will they achieve their goal Jamie Lee's father has a 'hot tip' on a company's IPO Will Jamie Lee and Ross be guaranteed a large return from this investment At this life stage, would you recommend they invest in an IPO Why or why not Ross inherits $50,000 from his uncle's estate Currently, the economy is in the recovery stage Referring to the ' Classification of Stock Investments ' chart found in the text, what types of stock would you suggest for Jamie Lee and Ross to invest this inheritance in, considering their current life stage and moderate risk investment strategies Jamie Lee and Ross would like a portion of their portfolio to be in a more stable investment and were told by a friend that bonds would be a good idea Why are bonds a good investment option for a conservative investor

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Case Study The twins are now 3 years old and Jamie Lee and Ross, both 38 are finally beginning to settle into a regular routine.

Case Study

The twins are now 3 years old and Jamie Lee and Ross, both 38 are finally beginning to settle into a regular routine. They have been discussing their future and determine they need to save $150,000 for college in 15 years, and they also dream of owning a beach house in their retirement which could be another $350,000 thirty years from now. They are wondering of this is all possible.

Current Financial Situation

Assets:

Checking account: $4,500

Savings account: $20,000

Emergency fund savings account: $21,000

IRA Balance: $46,000

Car: $8,500 (Jamie Lee) and $14,000 (Ross)

Liabilities:

Credit card balance: $4,000

Car loans: $2,000

Income:

Jamie Lee: $45,000 gross income ($31,500 net income after taxes)

Ross: $80,000 gross income ($64,500 net income after taxes)

Monthly Expenses:

Mortgage: $1,225

Property Taxes: $400

Homeowner's Insurance: $200

IRA contribution: $300

Utilities: $250

Food: $600

Baby essentials (clothing, toys, etc.): $200

Gas/maintenance: $275

Credit card payment: $400

Car loan payment: $289

Entertainment: $125

Directions

Read the above case study and answer the questions below. Upload your work to Canvas by the deadline.

Questions

Using the formula in Chapter13 for determining the amount of growth investments investors should have and considering that they are both 38 years old, how much of Jamie Lee and Ross's assets should be allocated to growth investments? How should the remaining investments be distributed, and what is the risk associated with each type of investment?
Jamie Lee and Ross feel they can budget $5,000 per year in a savings program for future college expenses for their twins. They expect an average annual return of 7 percent on that investment. If their twins start college in 15 years and they want to have $150,000 saved ($75,000 for each child), will they achieve their goal?
Jamie Lee's father has a 'hot tip' on a company's IPO. Will Jamie Lee and Ross be guaranteed a large return from this investment? At this life stage, would you recommend they invest in an IPO? Why or why not?
Ross inherits $50,000 from his uncle's estate. Currently, the economy is in the recovery stage. Referring to the 'Classification of Stock Investments' chart found in the text, what types of stock would you suggest for Jamie Lee and Ross to invest this inheritance in, considering their current life stage and moderate-risk investment strategies?
Jamie Lee and Ross would like a portion of their portfolio to be in a more stable investment and were told by a friend that bonds would be a good idea. Why are bonds a good investment option for a conservative investor?