Investing Project



Investing Project

To achieve your financial goals, you must take time to plan how you are going to save and invest your money. Putting money into a savings account alone will not help your clients achieve their goals because they will not earn enough interest to keep ahead of inflation. For this project, assume that you are a financial planner and a client came to you; just graduating from school and they have their first full time job. They received $25,000 in graduation money. They have budgeted $250 a month to save and invest. Your job is to decide how you are going to invest their graduation money and their monthly savings. At the minimum, you must develop a plan that will help them accomplish the following.

1. Car Fund (2-3 years) – Right now they have an old car with has high mileage. They guess that it will run good for 2-3 years yet before it starts breaking down. There is no loan for this car. When they buy a newer car, they’d like to have a 20% down payment.

2. House Fund (8-10 years) – They are renting an apartment now. They need to save money to use as a down payment for a house, typically 20% of the house price.

3. Vacation Fund – You want to take a vacation somewhere (their choice) within the next 2 years.

4. Emergency Fund – They want to create an emergency fund in case they get hurt, lose their job or some other unexpected emergency arises.(typically 3 months of expenses – use about $1500 per month)

5. Retirement Account – Even though retirement is probably 40 years away, they are financially smart and know that they should start saving for this now because compounding interest will help them accumulate a lot of money. Their goal is to have one million dollars by the time they retire.

Develop a plan for investing their graduation money and monthly savings that will help them achieve their goals. Their parents gave them the $25,000 for graduation. Since their parents want them to learn about different types of investments, they want you to invest a minimum of $1000 in each of the following types of investments:

• Certificates of Deposit (C.D.’s) or Money Market Accounts

• Stocks

• Bonds

• Mutual Funds

You must include the following in the presentation of their portfolio.

1. List of investments and amount for each. (From their graduation money)

2. Explanation of the 3 factors (rate, risk and liquidity) for each investment choice and your reasoning for the amount you invested.

3. What length of term will you buy for your C.D.’s? Why?

4. What types of stocks will you buy? Why?

5. What types of bonds will you buy? Why?

6. What types of mutual funds will you invest in? Why?

7. Use charts or graphs.

8. How much do you estimate their investments will grow to? Show your calculations and reasoning. (hint: use a future value calculator- look at yahoo finance, or estimate of stock prices, etc)

9. How much of their monthly savings will you be putting towards each of their goals?

10. What will they invest your monthly savings in?

11. For their retirement account, will they open a traditional IRA or open a Roth IRA?

12. If tieir company had a 401(k) plan, should they enroll in it? How much? Why?

This presentation can be done using PowerPoint, in Report form, Posters, etc…

Schedule

Day 1(Wednesday) –Begin research and planning

Day 2 (Thursday)–Research and planning

Day 3 (Friday) – Research and planning

Day 4(Tuesday) Finish Proposal

Day 5 (Thursday) Final Reflection

Helpful resources

Textbook, Business and Personal Finance

- Path to Investing

- Finance Freak, Investing info and financial calculators

– Yahoo Investing

- Yahoo Finance

- Financial Calculators

- Mutual Fund Investor’s Center

- Practical Money Skills, Calculators

- MSN Financial

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