Building a portfolio by using a combination of instruments with maximum returns and just the right amount of risk is key to successful investing. In this course, you have learned about types of financial markets and investments, short-term and long-term investment goals, and portfolio management.
Select one of the following prompts for your assignment. Research the required topics and use what you have learned in the course to create your analysis and investment strategy proposal.
Alice is a retired 75-year-old who has $500,000 after selling her small business and paying taxes on the sale. She wants to invest this money. Alice would like the capital to rise faster than inflation to maintain the purchasing power of her wealth. However, she would also like to make low-risk investments and have easy access to at least $50,000 per year for the next five years.
Andy and Sam are both 45 years old. They have two main financial goals: saving for retirement and saving for their eight-year-old daughter’s college education. Sam recently inherited money from his aunt, and after taxes, has $400,000. Andy and Sam would like to aggressively invest this inheritance and an additional $1,000 each month from their combined incomes in hopes of achieving maximum return. Andy and Sam want to retire 20 years from now, and their daughter will need to begin drawing money from the college fund in 10 years.
Sasha is 32 years old. She just won the lottery and decided to take a lump sum payment. After paying taxes, she has $2.4 million left. Sasha wants to immediately spend $500,000 and invest the rest. She doesn’t want to aggressively risk her money, but she does want to maximize her return so that she can quit her job now and live the most lavish lifestyle that she can afford for the rest of her life.
No matter which prompt you select, your analysis and investment strategy proposal should:
Explain in general how stocks, bonds, funds, futures, debts, and other investment instruments are traded in financial markets.
Analyze investment opportunities that align with the financial goals of the scenario.
Recommend specific investments to create a portfolio from the available capital.
Evaluate the risks of the recommended investments and the impact that diversification, taxes, inflation, and currency fluctuation could have on the proposed portfolio.
Calculate projected rates of return on each item in the proposed investment portfolio
Recommend strategies for long-term and short-term investment; include justifications for the recommendations you make.
- Explain in general how stocks, bonds, funds, futures, debts, and other investment instruments are traded in financial markets.
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