INVESTMENT CATEGORY:
Cost analysis Investment project
Background
Our rising employment rate under President Bush has allowed many Americans to acquire some amount of disposable income (). This extra money can be invested in several ways. One can invest in bank accounts such as a savings account or a certificate of deposit. An investor can also invest in stocks. Corporations sell stocks to raise money. These stocks allow the stockholder to collect dividends and entitle the stockholder to other rights of ownership, such as voting rights. Bonds, another type of investment, are a certificate of debt issued by a corporation or government entity guaranteeing payment of the initial investment plus interest by a certain date. Another option for investment is a mutual fund. A mutual fund is an investment company that invests in diversified types of securities. ()
First Investment Choice
Background
This investment is offered by the American Funds Group and has been in existence since 1968. It has been managed by the Management Team since 1986. It is a large growth mutual fund and has total assets of twelve million.
Justification
Investment Selection
This investment has provided positive returns for the past 38 years. I chose this mutual fund after doing some research online. I was looking for a large return, but at the same time a low risk investment. I found this fund, which is also invested in by large companies such as Target, Fannie Mae, and Ebay.
Investment Comparison
When compared to mutual funds in general, this investment is of average volatility (beta of .94) relative to S&P 500. It has a slightly higher Tax Cost ratio than the category average.
Second Investment Choice
Background
Google has been around on the internet for about six years. The Google search engine was created by Larry Page and Sergey Brin as a Stanford University computer science project. It has evolved into one of the leading online resources for information searches. It has just gone public in the middle of August, 2004 with its initial public offering. Google continues to provide and create innovative software for use in the computer world.
Justification
Investment Selection
I have selected this investment because it is something I use every day. I use Google exclusively to search for information, media such as pictures, and my own computer through their software. I also use Google’s advertising services through their adwords technology. Google is beginning to compete with some very large corporations such as Yahoo, Microsoft, and AOL in several fields. They are excelling in those fields as well.
Investment Comparison
When compared to the first investment choice, Google is a much higher risk investment. It is a relatively new company and had only been on the market for a few weeks at the time that stock was “purchased”. It has the potential, however, for a much larger return.
Third Investment Choice
Background
Adobe Systems is a leader in communication technologies, information technologies, and graphics. Corporations and government agencies utilize the adobe products. Adobe is also responsible for its self-proclaimed “gold-standard Photoshop software”.
Justification
Investment Selection
I selected Adobe Systems to invest in because I use their software every day. The Photoshop program is the preeminent software in photo-editing. I also use programs such as Acrobat every day. Adobe Systems generates annual revenues exceeding $1 billion.
Investment Comparison
This company, while IT-related, has been around longer than Google. It is also less volatile. It has shown steady earnings over the past twenty years, and faired relatively well through 2001 when most IT stocks performed poorly.
Fourth Investment Choice
Background
Vanguard High-Yield Corporate has been in existence since 1978. It has been managed by Earl E. McEvory since 1984. It is a high yield bond and has total assets of seven million. It is a bond of very low volatility (beta of .16).
Justification
Investment Selection
This investment has provided positive returns for the past 26 years. I chose this bond after doing some research online. I was looking for a large return, but at the same time a low risk investment. I found this fund, which is also invested in by large companies such as Nextel.
Investment Comparison
When compared to bonds in general, this investment is of low volatility. It has an average Tax Cost ratio compared to the category average.
Fifth Investment Choice
Background
Wachovia Pass Book savings accound is an extremely low risk investment.
Justification
Investment Selection
It has the highest interest rate of all major savings accounts.
Investment Comparison
This investment is the safest of all investments.
Investment Category: Mutual fund (no-load)
Company Offering Investment: American Funds Amcap A
Investment symbol: amcpx
Minimum Investment: $0
$500 subsequent
Minimum Time: -
Risk Level: Low
RETURN LEVEL: High
TOTAL annual Operating Expense %: 0.73%
INVESTMENT/ ASSET TYPE/ ALLOCATION: Investment assets are broken down into 80.98% domestic stock and 18.92% cash.
Investment Objective: Primary emphasis on income. High total return over time. Designed for investors seeking income but low risk.
Return HISTORY: 1 Year 5.09%
(Pre-Tax) 3 Year N/A
5 Year 3.49%
Since Inception* 11.88%
* 05/01/1967
Actual Return: 2003 30.6%
2002 -16.7%
2001 -8.4%
Last 3 months 7.2%
Reference: finance.,
Name: jorel Vaccaro
Investment Category: stock
Company Offering Investment: Google
Contact Information: Google Inc.
1600 Amphitheatre Parkway
Mountain View CA 94043
phone: (650) 623-4000
fax: (650) 618-1499
Investment Name: Google Inc.
Ticker symbol: goog
Share price: $102.37 per share
Shares: 100
Risk Level: Medium
Expenses: $50.00 buy/sell commissions –
Investment Objective: Buy stock in very young company, 1 month after IPO. I have used this company’s search engine for about 5 years and find its software releases to be of high quality.
Return HISTORY: 181.98
Actual Return: Last 3 months 76.2%
Reference: finance.,
Name: Jorel vaccaro
Investment Category: stock
Company Offering Investment: Adobe Systems
Contact Information: Adobe Systems Incorporated
Tel: 408-536-4416
Fax: 408-537-4034
Investment Name: Adobe Inc.
Ticker symbol: ADBE
Share price: $45.87 per share
Shares: 100
Risk Level: Low
Expenses: $50.00 buy/sell commissions –
Investment Objective: Buy stock in a company whose product I use very often. This company is an IT-based company, but has been around for a relatively long time for this type of company – 20 years.
Return HISTORY: 1 Year 40.2%
(Pre-Tax) 3 Year 8.5%
5 Year 3.0%
Since Inception* 9.3%
* 12/27/1982
Actual Return: 2003 48.1%
2002 -26.3%
2001 -28.8%
Last 3 months 30.8%
Reference: finance.,
Name: Jorel vaccaro
Investment Category: bond
Company Offering Investment: Vanguard High-Yield Corporate
Investment symbol: VWEHX
Minimum Investment: $3,000
$500 subsequent
Minimum Time: -
Fees: 1% redemption fee on shares sold within 364 days of purchase
Risk Level: Low
RETURN LEVEL: High
TOTAL annual Operating Expense %: 0.23%
INVESTMENT/ ASSET TYPE/ ALLOCATION: Investment assets are broken down into 82.55% domestic bonds, 5.97% foreign bonds, and 1.47% cash.
Investment Objective: Primary emphasis on income. High total return over time. Designed for investors seeking income but low risk.
Return HISTORY: 1 Year 10.49%
(Pre-Tax) 3 Year 9.25%
5 Year 5.92%
Since Inception* 9.57%
* 12/27/1978
Actual Return: 2003 14.7%
2002 .8%
2001 -1.7%
Last 3 months 1.4%
Reference: finance.,
Name: jorel Vaccaro
Investment Category: Pass book savings
Company Offering Investment: wachovia
Contact Information: 800-WACHOVIA (922-4684)
Investment Name: Pass Book Savings
Minimum Investment: $300 to $10,000 for rate of 0.15%
Minimum Time: 28 days
MATURITY: 1 year
Risk Level: Very Low
Expenses: No charges for buy/sell
INVESTMENT AMOUNT: $1,139
INVESTMENT/ ASSET TYPE/ ALLOCATION: Certificate of Deposit with an interest rate of 0.15% compounded daily through Wachovia.
Investment Objective: Primary emphasis on minimal risk. Guaranteed positive return for one-year life. In case other investments fall through, some money will be gained through this savings account.
Return HISTORY: 1 Year 1.81%
3 Year 5.54%
5 Year 9.41%
Actual Return: $1,191
The return history is from the actual returns. Rates vary as time passes.
Reference:
Name: jorel vaccaro
ROR CALCULATIONS
American Funds AMCAP A.
3-month: ROR =(500*17.91) /(500*16.71) – 1.0 = 7.2%
2003: ROR =16.85 / 12.90 – 1.0 = 30.6%
2002: ROR = 13.00 / 15.61 – 1.0 = -16.7 %
2001: ROR = 15.98 / 17.44 – 1.0 = -8.4 %
3-month F, D, C and P values are highlighted on attached pages marked Exhibit A and B
Google Inc.
3-month: ROR = (100*181.05 – 25) /(100*102.37 + 25) – 1.0 = 76.2%
3-month F, D, C and P values are highlighted on attached pages marked Exhibit ? and ?
Adobe Systems
3-month: ROR = (100*60.56 – 25) /(100*45.87 + 25) – 1.0 = 30.8%
2003 ROR = 39.03/26.36 – 1.0 = 48.1%
2002: ROR = 24.73/33.56 – 1.0 = -26.3%
2001: ROR = 30.92/43.43 – 1.0 = -28.8%
3-month F, D, C and P values are highlighted on attached pages marked Exhibit ? and ?
Vanguard High-Yield Corporate
3-month: ROR = (100*6.41) /(100*6.32) – 1.0 = 1.4%
2003 ROR = 6.00/5.23 – 1.0 = 14.7%
2002: ROR = 5.19/5.15 – 1.0 = .8%
2001: ROR = 5.12/5.21 – 1.0 = -1.7%
3-month F, D, C and P values are highlighted on attached pages marked Exhibit ? and ?
TOTAL
(500*17.91 + 100*181.05 – 50 + 100*60.56 – 50 + 100*6.41 + 1,191) / 25,000 – 1.00 = 5.64%
Values from Yahoo Finance
AMCPX
|Date |
|Open |
|High |
|Low |
|Close |
|Avg Vol |
|Adj Close* |
| |
|Nov-04 |
|17.37 |
|19.17 |
|17.37 |
|17.91 |
|0 |
|17.91 |
| |
|Dec-03 |
|16.52 |
|17.89 |
|16.13 |
|16.85 |
|0 |
|16.85 |
| |
|Jan-03 |
|13.36 |
|13.77 |
|12.78 |
|12.90 |
|0 |
|12.90 |
| |
|Dec-02 |
|13.89 |
|13.89 |
|12.93 |
|13.00 |
|0 |
|13.00 |
| |
|Jan-02 |
|16.16 |
|16.37 |
|15.44 |
|15.75 |
|0 |
|15.61 |
| |
|Dec-01 |
|16.02 |
|16.71 |
|15.85 |
|16.12 |
|0 |
|15.98 |
| |
|Jan-01 |
|17.44 |
|17.44 |
|17.44 |
|17.44 |
|0 |
|17.44 |
| |
|* Close price adjusted for dividends and splits. |
| |
GOOG
|Date |
|Open |
|High |
|Low |
|Close |
|Avg Vol |
|Adj Close* |
| |
|Nov-04 |
|193.55 |
|201.60 |
|161.31 |
|181.05 |
|14,028,035 |
|181.05 |
| |
|Oct-04 |
|130.80 |
|199.95 |
|128.90 |
|190.64 |
|13,249,066 |
|190.64 |
| |
|Sep-04 |
|102.70 |
|135.02 |
|98.94 |
|129.60 |
|5,392,385 |
|129.60 |
| |
|Aug-04 |
|100.00 |
|113.48 |
|95.96 |
|102.37 |
|7,703,522 |
|102.37 |
| |
|* Close price adjusted for dividends and splits. |
| |
ADBE
|Date |
|Open |
|High |
|Low |
|Close |
|Avg Vol |
|Adj Close* |
| |
|Nov-04 |
|56.23 |
|61.11 |
|55.52 |
|60.56 |
|2,121,728 |
|60.56 |
| |
|Dec-03 |
|41.64 |
|43.00 |
|37.56 |
|39.08 |
|3,754,931 |
|39.03 |
| |
|Jan-03 |
|25.00 |
|29.34 |
|24.57 |
|26.42 |
|3,023,819 |
|26.36 |
| |
|Dec-02 |
|30.55 |
|31.08 |
|24.27 |
|24.80 |
|3,374,180 |
|24.73 |
| |
|Jan-02 |
|31.14 |
|39.20 |
|30.19 |
|33.70 |
|3,911,876 |
|33.56 |
| |
|Dec-01 |
|31.91 |
|37.60 |
|30.00 |
|31.05 |
|3,862,215 |
|30.92 |
| |
|Jan-01 |
|54.06 |
|54.88 |
|42.38 |
|43.69 |
|22,325,150 |
|43.43 |
| |
|* Close price adjusted for dividends and splits. |
| |
VWEHX
|Date |
|Open |
|High |
|Low |
|Close |
|Avg Vol |
|Adj Close* |
| |
|Nov-04 |
|6.43 |
|6.46 |
|6.41 |
|6.41 |
|0 |
|6.41 |
| |
|Dec-03 |
|6.29 |
|6.38 |
|6.29 |
|6.38 |
|0 |
|6.00 |
| |
|Jan-03 |
|5.87 |
|5.98 |
|5.87 |
|5.93 |
|0 |
|5.23 |
| |
|Dec-02 |
|5.87 |
|5.88 |
|5.85 |
|5.88 |
|0 |
|5.19 |
| |
|Jan-02 |
|6.29 |
|6.36 |
|6.29 |
|6.29 |
|0 |
|5.15 |
| |
|Dec-01 |
|6.38 |
|6.38 |
|6.25 |
|6.29 |
|0 |
|5.12 |
| |
|Jan-01 |
|6.94 |
|6.96 |
|6.94 |
|6.96 |
|0 |
|5.21 |
| |
|* Close price adjusted for dividends and splits. |
| |
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