Please answer #4 only: How does the time value of money and the asset allocation concept affect the types of long-term goals and the investments that a couple like the Garners might use to build their financial nest egg? Explain.

Income (cash inflow) Joe's take-home salary Mary's take-home salary Total income Cash outflows Monthly fixed expenses: Home mortgage payment, including taxes and insurance Automobile loan Automobile insurance Life insurance premium Total fixed expenses Monthly variable expenses Food and household necessities Electricity Natural gas Water Telephone Family clothing allowance Gasoline and automobile repairs Personal and health care Recreation and entertainment Gifts and donations Minimum payment on credit cards Total variable expenses Total monthly expenses Surplus for savings or investments $3,500 $1,020 890 315 30 50 680 240 175 35 80 230 95 50 700 350 80 $4,520 $1,385 $2,915 $4,300 220 Personal Finance, 11th Edition Once the Garners realized they had a $220 surplus each month, they began to replace the $1,200 they had taken from their savings account to pay for repairing the air conditioner Now it was time to take the next step Questions 1. How would you rate the financial status of the Garners before the air conditioner broke down? 2. The Garners' take-home pay is over $4,500 a month. Yet, after all expenses are paid, there is only a $220 surplus each month. Based on the information presented in this case, what expenses, if any, seem out of line and could be reduced to increase the surplus at the end of each month? 3. Given that both Joe and Mary Garner are in their mid-30s and want to retire when they reach a 65, what type of investment goals would be most appropriate for them? 4. How does the time value of money and the asset allocation concept affect the types of long-term goals and the invest ments that a couple like the Garners might use to build their financial nest egg? 5. Based on the different inves ments described in this chapter, what specific types of investments (stocks, mutual funds, real estate, etc.) would you recommend for the Garners? Why