Meghan and Harry have hired you to deliver some financial expertise and advice. They are 30 years old and have two children, ages 4 and 5, and live in Denver, Colorado. They work as engineers at a transportation company and currently earn $90,000 each (after-tax).

In your initial meeting with them, they stated the following financial goals:

1 Establish an adequate emergency fund

2 Pay off current debts

3 Purchase a 4 bedroom, 3 bathroom home in the Highlands Ranch area, where this type of home averages about $400,000 (they want to put down 20% as a down payment and finance the rest using a 6%, 30-year mortgage)

4 Create a college fund for their children (they plan for each child to enroll at the University of Colorado when they turn 18 and have estimated the total cost of college at $60,000 for each child)

5 Establish an investment plan that will grow to $3,000,000 when they retire at age 65.

Family Financial Information

Assets

Checking $5,000

Savings $10,000

Cars $40,000

Liabilities

Student Loans $40,000

Car Loans $20,000

Credit Cards $3,000

Monthly Outflow:

Rent $2,000

Insurance $150

Utilities $300

Food $550

Daycare $425

Kid Essentials $150

Gas/Maintenance $225

Credit Card Payments $500

Student Loan Payments $275

Car Payments $550

Entertainment $200

Deliverables:

3 Recommend the percentage of growth assets that this family should be invested in given their investment time horizon. Explain how you came up with this number and what types of growth assets are available to them.

4 Recommend some steps this family could take to start chipping away at their current debt balances.

5 Assuming an 8% return on investments, show this family how much they should be investing each month to fund their education and retirement goals (show your TVM calculations). Be sure to explain to them how various economic conditions could derail these goals, using the current economic climate as an example (the yield curve is an excellent reference point).

6 When talking with Harry, you have found his risk tolerance to be a bit on the aggressive side. Compare the advantages and disadvantages of investments that carry less risk (like bonds) to those that carry more risk (like stocks and real estate). Be sure to mention the relationship between bond prices and interest rates given the unusual current economic climate. Further, be sure to explain to him how to compare the returns of municipal bonds to the returns of other investment products (no calculations needed here, just explanation).

7 Given this family will likely need to invest in stocks to meet their long-term financial goals, explain the long-term and short-term stock investment strategies that are available to them. Be sure to include the benefits and risks of these strategies. Moreover, explain the types of stocks that they will want to include in their portfolio (blue chip, growth, income, etc.) and provide some specific stock recommendations within each type.

8 Meghan has heard a lot about the Gamestop stock situation this year, but she doesn't underestand what happened. Explain, specifically, what happened here; including the winners and losers, and lessons learned.

9 Harry is thinking about purchasing some property that he can rent out for real estate income. Please share a few ideas that he can use to compare investment properties and make good decisions in regard to cash flow.

10 Calculate the monthly payment this family would need to make on their mortgage (show your TVM calculations). Explain how much interest will be paid over the life of this loan. Additionally, explain what would change if the family were to add $500 extra to this payment each month. (An amortization schedule would be helpful!)

11 Recalculate this family's monthly outflow assuming your recommendations are implemented. Be sure to present this new "budget" line-by-line, in the same format presented above.

(Note: if your new monthly outflow is greater than your monthly inflow from their incomes, please adjust your recommendations as they do not have any interest in changing employment or taking on additional jobs.)

(Note 2: It's possible that their long-term investment goals are not reasonable - if that's the case, make sure you tell them that and revise your monthly outflows accordingly).

Format: Your Excel calculations should be submitted for my review. However, your client "presentation" must be professional and client-ready. This can be written up in Word, Keynote, PowerPoint, etc. No matter the software you choose for your presentation, all recommendations must be both specific and actionable.