Question
Mr. A. Smith is a 28-year-old college graduate who holds a steady job as a valued employee in a blue-chip company. He is married with
Mr. A. Smith is a 28-year-old college graduate who holds a steady job as a valued employee in a blue-chip company. He is married with two young children. In the few years that he has been working he has built up two ($2 m) cash reserves in the bank. He also has adequate insurance coverage. Mr Smith has a moderate to high risk profile depending on the type of investment. His current short term and long-term goal is to acquire a house and car and build a long term retirement fund and college fund for his children.
b. Recommend and justify a long-term asset allocation that is consistent with the investment policy statement you created in Part a. Briefly explain the key assumptions you made in generating your allocation.
The policy statement for your client should address the following specifics
Objectives of the investment strategy:
*Return requirement
*Risk Tolerance
Constraints:
*Time Horizon
*Liquidity requirement
*Taxes
*Legal and regulatory
*Unique circumstances
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