Question
You have a traditional IRA with $500,000 in it.You expect to add $800 to it each month from here until you retire (30 years from
You have a traditional IRA with $500,000 in it.You expect to add $800 to it each month from here until you retire (30 years from now). Decide how you are going to allocate the funds you have and the funds you will contribute in the future. Write up a description/justification of this decision and compute what your total costs will be (both one time costs, and recurring).You can invest in any securities available within an IRA, including stocks, mutual funds, ETF's, bonds, bond funds, options, and any other asset you can access through a brokerage account (i.e., it is available as an option on E-trade).You can short or buy on the margin if you want. Also choose a brokerage account to manage your IRA and look up the fees associated with it.
1.How much money you will put in each selection now, and how much you plan to put in each asset in the future.Since the contribution amounts are known, give these amounts in dollars.Be sure to provide the name of each asset and an identifier (like a ticker) that I could use to look it up.
2.What will the fees be on the individual assets and how much will these fees be each month in total (also, how much will it cost to Allocation your initial $500,000 position).Include front-end load fees if applicable, management fees, brokerage execution fees, if applicable, and any other costs you may incur through these investments.Other costs could include 12b-1 fees in the case of some mutual funds (assume the maximum allowable gets spent on this). Also mention what the back end load fees would be, if any, when you go to liquidate this portfolio. If you were to apply these fees to a raw fund return of 7% per year for the next 30 years, how much of a difference to the fees cost you in total wealth accumulation?
3.In what ways does your portfolio selection decision address any risks with which you are concerned?How have you addressed diversification?Persuade me that your resulting portfolio is a good one.
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