CONTINUING CASE Investing Fundamentals The triplets are now three and a half years ol now that the triplets are a little more self-sul and crying babies! Jamie Lee and Ross finally had a welcomed a conversation about their future and the future of the major worry of the both of them. They both wire and a half years old and Jamie Lee and Ross, both 38, are finally beginning to settle into a regular routine mre a little more self-sufficient. The first three years were a blur of diapers, feedings, baths, mounds of laundry They agreed that it was time to talk to an Finally had a welcomed dinner out on their own as Ross's parents were minding the triplets. They were having their future and the future of the triplets. College expenses ($100,000) and their eventual retirement seem to be a e both of them. They both have dreamed of owning a beach house when they retire. That could be another $350,000 years from now. They wondered how they could possibly afford all of this. that it was time to talk to an investment counselor but wanted to organize all of their financial information and discuss their family's financial goals before setting up the appointment. Current Financial Situation Assets (Jamie Lee and Ross combined): Monthly Expenses: Checking account: $4,500 Mortgage: $1,225 Savings account: $20,000 Property taxes: $400 Emergency fund savings account: $21,000 Homeowner's insurance: $200 IRA balance: $32,000 IRA contribution $300 Car: $8,500 (Jamie Lee) and $14,000 (Ross) Utilities: $250 Food: $600 Liabilities (Jamie Lee and Ross combined): Baby essentials (diapers, clothing, toys, etc.): $200 Student loan balance: $0 Gas/maintenance: $275 Credit card balance: $4,000 Credit card payment: S400 Car loans: $2.000 Car loan payment: $289 Income: Entertainment: $125 Jamie Lee: $45.000 gross income ($31.500 net income after taxes) Ross: $80,000 gross income ($64,500 net income after taxes) Questions 1. Looking back to Chapter I and Exhibit 1-6, Financial goals and activities for various life situations," describe the life stage that corresponds with what Jamie Lee and Ross are experiencing right now. What are some of the financial activities that they should be participating in at this stage? 2. After reviewing Jamie Lee and Ross's current financial situation, suggest specific and measurable short-term and long-term financial goals that they can implement at this stage. 3. Using the investment goal guidelines, assess the validity of Jamie Lee and Ross's short- and long-term financial goals and objectives. EXHIBIT 1-6 Fine or Financial goals and activities to Foundation Financial Goals and Activities und Obtain appropriate career training Create an effective financial recordkeeping - Accumulate an appropriate Coverage plan for reti - Create and implement a flexible budget. Develop a regular savings and investment program anestate Specialized Financial Goals and Activitie ncial Goals and for various Life Situations Young Couple with Children under 18 Single Parent with Children under 18 Young Dual-Income Couple, No Children Young, Single (18.35) Establish financial independence. Obtain disability insurance to replace Income during prolonged illness Consider home pur- chase for tax benefit. . Carefully manage increased need for the use of credit Obtain an appropriate amount of life insurance for the care of dependents Use a will to name guardian for children Obtain appropriate health. If, and disability insurance . Contribute to savings and investment fund for college. Name a guardian for children and make other estate plans. Coordinate insurance coverage and other benefits Create investment program for changes in life situation (larger house, children). . Consider tax-deferred contributions to retirement fund Tied Couple, No Children Mixed-Generation Elderly Individuals and Children under 18 Older (50+), Single Person, No Dependent Children vidual bank and credit accounts Communicate budgeting attitude differences Discuss and share joint and individual financial Older Couple (50+). No Dependent Children . Review financial assets and estate plans . Consider household budget changes several years prior to retirement Plan retirement housing, living expenses. recreational activities and part-time work . Obtain long-term care. life, disability insurance coverage Use dependent care service. Provide for handling finances of elderly if they become ill. . Consider splitting vestment cost- elderly get income while alive, principal to Survivors Make arrangement for long-term health care coverage. Review will and estate plan. Plan retirement living facilities, living expenses, and activities. Monitor investments to consider current financial needs and market conditions. goals. Consider a home purchase with a property agreement CONTINUING CASE Investing Fundamentals The triplets are now three and a half years ol now that the triplets are a little more self-sul and crying babies! Jamie Lee and Ross finally had a welcomed a conversation about their future and the future of the major worry of the both of them. They both wire and a half years old and Jamie Lee and Ross, both 38, are finally beginning to settle into a regular routine mre a little more self-sufficient. The first three years were a blur of diapers, feedings, baths, mounds of laundry They agreed that it was time to talk to an Finally had a welcomed dinner out on their own as Ross's parents were minding the triplets. They were having their future and the future of the triplets. College expenses ($100,000) and their eventual retirement seem to be a e both of them. They both have dreamed of owning a beach house when they retire. That could be another $350,000 years from now. They wondered how they could possibly afford all of this. that it was time to talk to an investment counselor but wanted to organize all of their financial information and discuss their family's financial goals before setting up the appointment. Current Financial Situation Assets (Jamie Lee and Ross combined): Monthly Expenses: Checking account: $4,500 Mortgage: $1,225 Savings account: $20,000 Property taxes: $400 Emergency fund savings account: $21,000 Homeowner's insurance: $200 IRA balance: $32,000 IRA contribution $300 Car: $8,500 (Jamie Lee) and $14,000 (Ross) Utilities: $250 Food: $600 Liabilities (Jamie Lee and Ross combined): Baby essentials (diapers, clothing, toys, etc.): $200 Student loan balance: $0 Gas/maintenance: $275 Credit card balance: $4,000 Credit card payment: S400 Car loans: $2.000 Car loan payment: $289 Income: Entertainment: $125 Jamie Lee: $45.000 gross income ($31.500 net income after taxes) Ross: $80,000 gross income ($64,500 net income after taxes) Questions 1. Looking back to Chapter I and Exhibit 1-6, Financial goals and activities for various life situations," describe the life stage that corresponds with what Jamie Lee and Ross are experiencing right now. What are some of the financial activities that they should be participating in at this stage? 2. After reviewing Jamie Lee and Ross's current financial situation, suggest specific and measurable short-term and long-term financial goals that they can implement at this stage. 3. Using the investment goal guidelines, assess the validity of Jamie Lee and Ross's short- and long-term financial goals and objectives. EXHIBIT 1-6 Fine or Financial goals and activities to Foundation Financial Goals and Activities und Obtain appropriate career training Create an effective financial recordkeeping - Accumulate an appropriate Coverage plan for reti - Create and implement a flexible budget. Develop a regular savings and investment program anestate Specialized Financial Goals and Activitie ncial Goals and for various Life Situations Young Couple with Children under 18 Single Parent with Children under 18 Young Dual-Income Couple, No Children Young, Single (18.35) Establish financial independence. Obtain disability insurance to replace Income during prolonged illness Consider home pur- chase for tax benefit. . Carefully manage increased need for the use of credit Obtain an appropriate amount of life insurance for the care of dependents Use a will to name guardian for children Obtain appropriate health. If, and disability insurance . Contribute to savings and investment fund for college. Name a guardian for children and make other estate plans. Coordinate insurance coverage and other benefits Create investment program for changes in life situation (larger house, children). . Consider tax-deferred contributions to retirement fund Tied Couple, No Children Mixed-Generation Elderly Individuals and Children under 18 Older (50+), Single Person, No Dependent Children vidual bank and credit accounts Communicate budgeting attitude differences Discuss and share joint and individual financial Older Couple (50+). No Dependent Children . Review financial assets and estate plans . Consider household budget changes several years prior to retirement Plan retirement housing, living expenses. recreational activities and part-time work . Obtain long-term care. life, disability insurance coverage Use dependent care service. Provide for handling finances of elderly if they become ill. . Consider splitting vestment cost- elderly get income while alive, principal to Survivors Make arrangement for long-term health care coverage. Review will and estate plan. Plan retirement living facilities, living expenses, and activities. Monitor investments to consider current financial needs and market conditions. goals. Consider a home purchase with a property agreement