Project Goals: Help students integrate goal-based planning and investment risk to develop a basic investment plan.

Project Introduction: The Story: Dave is 34 years old. He has been employed as a manager at ABC Engineering for 8 years. He earns $63K per year of which he is able to save 5% towards his financial goal. Dave took the risk assessment questionnaire from Unit 1 and when he added up his points he had 83 points. This puts him at the upper end of the moderately conservative section just below the conservative range. He has a goal of paying $15,000 towards college education for each of his 3 children in 10 years. ($45K total). He would like to be fairly certain to reach his goal.

Important Note: Often when you are given a work project you wont have all the information you need to complete the project. This project is no different. If you are lacking some information it is up to you to find that information. The discussion board for this project is a great place to start.

Section 1 The Calculation:

Assume the following:

Funding his childrens education is Daves only financial goal.

No inflation

No raises

The full $45,000 is needed in 10 years.

Calculate what interest rate Dave would need to earn to reach his goal. Please show what you input for N, I, PV, PMT, and FV.

Section 2 A Look at Reality:

Do some Google searches and report some ranges of current and past returns for stocks, bonds, mutual funds and other possible investments.

Based on your findings how reasonable is it for Dave to earn the return he needs considering his risk tolerance?

Comment on whether it is good to use past performance to predict future performance. Please reference your work.

Section 3 The Balancing Act: What do you recommend Dave to do? Please use the Roadmap to your own portfolio that begins at about minute 5:30 of the second lecture video to develop an investment plan for Dave. As part of your response please integrate what you learned from Dr. Michael Finkes article Whats the Point of Investing about using a goal-based approach.

Please write a well thought out response with citations from multiple sources.

There is no word count or page limit but you must address all parts of all steps of the roadmap as outlined in the lecture video.

Checklist for Submitting the Unit 1 Project for Grading:

Upload a Word document to Blackboard with the following:

Your time value of money calculation including the steps

Some examples of current rates for stocks, bonds, etc. with references of where the numbers came from. Include a discussion about the value of using past performance to predict future performance.

A Roadmap to Daves Portfolio addressing all parts of all three steps as outlined in the lecture video. Include multiple sources with correct citations.