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An investor wants $100,000 of retirement income starting in 30 years. The investor wants to plan to spend through age 100 ater retiring at age 60 to be safe (40 years). The investor has no investable funds today but over the next 30 years wants to save, on average, 519,000 a year. The risk tolerance for the next 30 years in the accumulation stage is aggressive while in retirement for 40 years it is conservative. The investor wants to keep all assets in Canada but is interested in diversification into the U.S. as an alte mative. A return goal of6% in retirement will be used to estimate the portfolio amount needed at retirement. During accumulation a desired return is around 8%. The funds will be saved in a registered retirement savings plan. No funds are required for donations or family inheritances at death. Cash should be 5% ofa portfolio for liquidity purposes. Estimated Returns S&P TSX Cdn. Bonds Coh. T-Bis S&P 500 U.S. Bonds Next 30 years 9% 596 396 10% 59% 40 years in retirement 996 596 1096 596 3% QUESTIONS Question #1 (2 marks) What is the desired amount of the portfolio at age 60 retirement? Show calculation inputs Amount rounded (X,X00,000) = Question #2 (1 marks) Why would the risk tolerance change in retirement? Question #3 (3 marks) Which portfolio mix would you pick to achieve the desired retum in the accumulation years? Alte mative #1: Canadian only asset dasses (allocation should be within 0.1) % MEX Return Weighted Return S&P TSX 9% Cdn. Bonds 5% cdn.T-Bills 5% 396 Total 100% Approx 8% Question 84 3 marks) Altem ative #2. Adding U.S. asset dasses to the mix What are some advantages and/or disadvantages of this strategy? Advantages 1 and/or 2 Disadvantages 3