PFI 3381: Investments Unit 1 Project Learning Goals: Define the purpose of investing and investment concepts such as time value of money, risk, return, and the risk/retum trade off. Describe the relationship between investment type and risk. Examine the impact of the economy on investment. Please review the following scenarios. You will be asked to answer questions below about each scenario. If you have any questions, please post them in the Unit 1 Discussion board and your classmates and instructor can help you! Project Scenarios: Thomas is 21 years old and just landed a job at Exxon Mobil in the oil field. He is looking forward to completing his first year on the job at which time he will be eligible to contribute to his company's 401(k) plan. He has been saving his money since he graduated from High School he as a 3 month Emergency Fund. He is wanted to invest some money but, doesn't know what kind of portfolio he should be looking into. He took the Risk Assessment Questionnaire and scored an 11. He is wanting to know what that means. Matt and Raquel are in their late forties. They have 3 children that are all living on their own. They both are employed full time. Due to some recent job changes and a few family emergencies, they don't have a lot of savings in their retirement accounts. Matt has a risk tolerance score of 35 and Raquel has a risk tolerance score of 53. They would not like to work during their retirement years and are concerned about their current retirement savings accounts. They had a friend tell them they needed to invest heavily in some "high paying alternative investments" that he thinks will payoff big time in the next 5 to 10 years. They are not totally sure what to do now. Jane is 55 years old and is divorced. She works at The Veterans Hospital in South Padre Island, Texas. She makes $115,000 per year (with her bonus) and has an employer sponsor pension plan. She wanted a little extra money in retirement so, she set up a personal IRA 5 years ago. She feels a little uneasy about her current retirement situation. In the divorce proceedings, she discovered her husband was entitled to half of her pension payments. She set up her IRA after the divorce and wonders if she was "too late" in getting it all set up. She wonders how she can invest some additional cash from her paycheck each month. Her risk tolerance score based on the Risk Assessment Questionnaire is 71. Project Requirements: 1. Identify the risk tolerance level of the individual(s). Describe what that means for their investment choices. - -1 paragraph (at least 3 sentences) for each scenario. 2. Recommend an investment portfolio based on that level of risk tolerance. Do this by suggesting how much of the "investment pie" should be devoted to each of the following: Cash and Cash Equivalents, Bonds, Stocks, Real Estate, and Alternative (or very risky) investments. Note that most, if not all, of the investment options listed should be in your pie. You decide how much of each goes into the pie. There isn't an exact "right answer" for each scenario but there are wrong answers. Also, your justification is just as important as your amounts. -1 paragraph (at least 3 sentences) for each scenario. Instructions for adding this chart to your paper and modifying the #s: a. Copy and paste this chart into your Word document. b. Right click inside the box but outside of the pie. c. Choose "Edit data" d. A mini-spreadsheet will pop up. e. Change the numbers in column B to your chosen percentages for each investment. f. Close the mini-spreadsheet by click on the "x" in the upper left hand corner. INVESTMENT PORTFOLIO Cash Real... Bonds Stocks 3. In at least 3 sentences, identify at least one thing currently going on in the economy that may affect the investments you have chosen for the three scenarios and comment on the impact of these events. (For example, you may want to consider the impact of the current inflation rate. If the Fed has recently raised or lowered interest rates you may want to comment on that. If you recommend real estate you should look at how the real estate market is doing and comment on how that might impact your recommendation).--1 paragraph addressing all three scenarios. Please cite where you found what was going on in the economy.) PFI 3381: Investments Unit 1 Project Learning Goals: Define the purpose of investing and investment concepts such as time value of money, risk, return, and the risk/retum trade off. Describe the relationship between investment type and risk. Examine the impact of the economy on investment. Please review the following scenarios. You will be asked to answer questions below about each scenario. If you have any questions, please post them in the Unit 1 Discussion board and your classmates and instructor can help you! Project Scenarios: Thomas is 21 years old and just landed a job at Exxon Mobil in the oil field. He is looking forward to completing his first year on the job at which time he will be eligible to contribute to his company's 401(k) plan. He has been saving his money since he graduated from High School he as a 3 month Emergency Fund. He is wanted to invest some money but, doesn't know what kind of portfolio he should be looking into. He took the Risk Assessment Questionnaire and scored an 11. He is wanting to know what that means. Matt and Raquel are in their late forties. They have 3 children that are all living on their own. They both are employed full time. Due to some recent job changes and a few family emergencies, they don't have a lot of savings in their retirement accounts. Matt has a risk tolerance score of 35 and Raquel has a risk tolerance score of 53. They would not like to work during their retirement years and are concerned about their current retirement savings accounts. They had a friend tell them they needed to invest heavily in some "high paying alternative investments" that he thinks will payoff big time in the next 5 to 10 years. They are not totally sure what to do now. Jane is 55 years old and is divorced. She works at The Veterans Hospital in South Padre Island, Texas. She makes $115,000 per year (with her bonus) and has an employer sponsor pension plan. She wanted a little extra money in retirement so, she set up a personal IRA 5 years ago. She feels a little uneasy about her current retirement situation. In the divorce proceedings, she discovered her husband was entitled to half of her pension payments. She set up her IRA after the divorce and wonders if she was "too late" in getting it all set up. She wonders how she can invest some additional cash from her paycheck each month. Her risk tolerance score based on the Risk Assessment Questionnaire is 71. Project Requirements: 1. Identify the risk tolerance level of the individual(s). Describe what that means for their investment choices. - -1 paragraph (at least 3 sentences) for each scenario. 2. Recommend an investment portfolio based on that level of risk tolerance. Do this by suggesting how much of the "investment pie" should be devoted to each of the following: Cash and Cash Equivalents, Bonds, Stocks, Real Estate, and Alternative (or very risky) investments. Note that most, if not all, of the investment options listed should be in your pie. You decide how much of each goes into the pie. There isn't an exact "right answer" for each scenario but there are wrong answers. Also, your justification is just as important as your amounts. -1 paragraph (at least 3 sentences) for each scenario. Instructions for adding this chart to your paper and modifying the #s: a. Copy and paste this chart into your Word document. b. Right click inside the box but outside of the pie. c. Choose "Edit data" d. A mini-spreadsheet will pop up. e. Change the numbers in column B to your chosen percentages for each investment. f. Close the mini-spreadsheet by click on the "x" in the upper left hand corner. INVESTMENT PORTFOLIO Cash Real... Bonds Stocks 3. In at least 3 sentences, identify at least one thing currently going on in the economy that may affect the investments you have chosen for the three scenarios and comment on the impact of these events. (For example, you may want to consider the impact of the current inflation rate. If the Fed has recently raised or lowered interest rates you may want to comment on that. If you recommend real estate you should look at how the real estate market is doing and comment on how that might impact your recommendation).--1 paragraph addressing all three scenarios. Please cite where you found what was going on in the economy.)
