Investment Portfolio

Transcription

1 Investment Portfolio Directions: Your task is to create an investment portfolio for yourself. Make this as realistic as possible, as it pertains to your life goals and your future plans with your income and budget. You will complete three investment goals, and you will lay out a plan to show a clear picture of when and how much to invest throughout your life in order to reach your goals. To make the math easier, you will use five-year increments of time. Steps: 1. Describe three investment goals. One should be retirement and the other two can include a rainy day fund or a savings goal for a big, expensive item. (For example, your goal #1 could be retirement, your goal #2 could be to save $20,000 for an emergency fund, and your goal #3 could be to save for a down payment for a house. Or you could have two goals where you save for big, expensive items and not have a rainy day fund. It's up to you it's your life.) a) Each goal should have five parts: (a sample outline you can follow is on the last page) A Goal Area (name your goal) A Time Frame for your goal (how long will it take you to reach your goal? When will you start, when will you finish, and what is the total time it will take?) Your reasoning for choosing this goal and the amount your goal/item will cost. Give evidence of this in the form of a screen shot or copy and paste the information. Total amount of money you will need to save, including math showing how you'll factor in for an inflation rate of 3% The type of investment you will choose that will help you meet your goal b) For your retirement goal, include the amount of money you will need to save to pay for your retirement (you'll need at least ½ of your income that you were making the year prior to retirement if you don't have a pension) and any major expenses you may have (Big Expensive Items you would like to buy when you retire.) Explain how you arrived at your living expenses for retirement Show evidence (screen shots) of any Big Expensive Items with a description and the cost of each Create a list of expenses you might have if you create a Rainy Day fund for retirement 2. Show the breakdown of your investments on the five-year interval chart. Make sure that the time frames match the time frame in your goals. (Some of your goals may only take a few years and others may take 30+.) 3. Show the breakdown of each goal on the annual investment charts. 4. Explain how your investments matched your goals using at least 5 different investment terms from your Investment Handbook. For example, use two terms to describe your retirement choice, two terms for your second goal of a big expensive item, and one term for your third goal. Make sure you use the terms appropriately to connect your investment choices to your goals. Tell why you chose each type of investment in this section. 5. Explain three reasons why your plan is realistic or unrealistic for your life. (Things to consider: when/how you will start, how your goals match your salary and your budget, how involved you will have to be to monitor your savings, etc.) To see how this will be graded, please refer to the grading rubric. Due Date:

2 Investment Portfolio Grading Rubric 1. Goals Goal #1 (Retirement) Goal #2 (BEI/Rainy Day) Goal #3 (BEI/Rainy Day) Goal Area Time Frame Reasoning, Cost, Evidence Amounts with Inflation Math Showing Inflation and Average Annual Amount to save Investment Type Shown /28 2. Five-Year Interval Chart All 3 Goals on Chart /3 Time Frames Match /3 3. Annual Investment Charts Total Completion /3 Math Correct /2 Legible /2 /6 /7 4. Explain how Investments Match Goals (using investment terms from your handbook) Underlined/Listed Used Correctly and Explained Connected to & Related to Goal Term 1 /1 /2 /1 Term 2 /1 /2 /1 Term 3 /1 /2 /1 Term 4 /1 /2 /1 Term 5 /1 /2 /1 5. Realistic/Unrealistic Plan Detailed (more than 1 sentence per reason) Insightful Accurate (appropriate use of terms) Reason #1 /1 /1 /1 Reason #2 /1 /1 /1 Reason #3 /1 /1 /1 /20 Total Grade: 70 Points /9

3 Five-Year Interval Chart Type of Savings or Investment Savings or Money Market (3%) US Bonds or CDs (5%) Corporate Bonds (8%) Regular Mutual Funds TSA (403B) or IRA (401K) Roth IRA or Roth 401K Stock or Stock Fund Note: If you start on your 25 th birthday and go through the end of your 29 th year, that would be 5 years. If you are investing less than five years in an interval, put in the actual years in parenthesis in that interval box.

4 Annual Investment Charts Goal # 1: Retirement Yearly Monthly Bi-Weekly Yearly Monthly Bi-Weekly Goal # 2: Yearly Monthly Bi-Weekly Yearly Monthly Bi-Weekly Goal # 3: Yearly Monthly Bi-Weekly Yearly Monthly Bi-Weekly Take the amount from your Five Year Interval Chart and divide it by 12 to find your monthly contribution. (For example, take the annual amount you would save from ages from your Five Year Interval Chart and divide it by 12 to figure out how much you need to save each month.) Take the monthly amount you figured and divide it by 2 to find your bi-weekly contribution (this would be a payroll deduction amount taken either right from your paycheck or from your bank account, depending on what type of account you have.)

5 Investment Portfolio Sample Layout Page 1: The Grading Rubric with your name Page 2: Your first Goal 1. Goal #1: Name your Goal (Probably Retirement) 2. Time Frame: Start (what age?) Finish (what age?) Total Time (how many years?) 3. Reasoning/explanation for your goal and the amounts needed For example: Living Expenses (need ½ of income pre-retirement) Your Pre-Retirement Income/2 = Retirement Income x number of years you think you'll live post-retirement = Your total amount you need to save, pre-inflation Cost of a Big Expensive Item you want to purchase in retirement 4. Total Amount Needed Add your costs together from step 3 to get the amount before inflation Show your amount after 3% inflation: Total Amount x factor for (3%/X years/use Single Deposit Table) Multiply your total amount by the inflation factor from the attached table (this is determined by assuming a 3% inflation rate and finding how many years you plan on saving. This will give you a factor to multiply by.) 5. Match your Goal with an Investment Type and Find your Average Annual Money Amount Name an investment type you will choose (find one in your handbook) and the percentage it will yield Divide the total amount you need to save, including inflation (determined in Step 4) by the compounding interest factor for the percentage yield you are choosing and the number of years you plan on investing. (E.g. If you plan on investing at a 12% yield for 30 years, your factor will be So, you'll divide the total amount with inflation that you'll need to save by this factor to get the annual amount you need to invest.) Page 3: Evidence of your Big Expensive Items you want in Retirement (If this will fit on the page with your goal, put it on page 2) Page 4: Goal #2 (use same format for goal 1) Page 5: Evidence of your Big Expensive Items for this goal Page 6: Goal #3 (use same format for goal 1) Page 7: Evidence of your Big Expensive Items for this goal Page 8: Five-Year Interval Chart completed Page 9: Annual Investment Charts completed Page 10: An explanation of your goals and your investment choices using at least 5 different investment terms Page 11: Explain three reasons why your plan is realistic or unrealistic for your life