Mr. Jones Retirement Case Analysis Paper

How much would you pay for a security that pays you $500 every 4 months for the next 10 years if you require a return of 8% per year compounded monthly?

I would opt to take the $5,000 now, combine it with the existing saving of $10,000, and invest it at the 3% interest rate. The average 3% rate of return would produce earned interest of $463.64, which would exceed the three-year return of $250.00 by $213.64.

investor should invest $369.35 in asset A and the remaining $630.65 in asset B. The

The interest rate of a term deposit is at 5.2% per annum. Available investment fund is $200,000. Term Deposit will yield $10,400 p.a. by using $200,000 multiply by 5.2%. However, for compounded interest rate, 5 years investment will be $257,697 (ROI = $57,697). And 10 years investment will be $332,038 (ROI = $132,038), assume that the interest rate is constant within 10 years period. The risk is considered minimal.

For Investment A: (40 – 25)/ 10= 1.5 standard units= close to 94% to get the 40 million in return

b. If you inherited $100,000 today and invested all of it in a security that paid an 8% rate of return, how much would you have in 15 years?

After retirement, she wants to live a life style that will cost about $35,000 per year, payable at the beginning of each year. Her planning horizon is 30 years (i.e. she does not expect to live longer than age 95). Assume the rate of interest is 5%, all investments are made at the end of the year, and all expenses are payable at the beginning of the year. (a) How much money will she have when she retires at 65? (4 marks) (b) How much money does she need at age 65 to support her post-retirement years? (4 marks) (c) If her post-retirement expenses start as stated above at $35,000 per year but increase at the expected rate of inflation of 2% per year, how much money does she need at age 65 to support her retirement? (5 marks) (d) To reach the amount found in part (c) she is planning to invest $X this year, and increases this amount every year at the rate of 3% per year, what is this amount X? (5 marks) Answer (a) She will have FV = PMT x FVAF(5%, 40 years) = $603,998.87 (b) She will need PV of Annuity Due: PV = PMT x PVAF(5%, 30 years) x (1.05) = $564,937.58 (c) She will need PV of Growth Annuity Due: PV = [(35,000)(1.05)/(5% - 2%)] x [1 - (1.02/1.05)30] = $711,592.43 (d) She needs to have the amount calculated in (c), i.e. $711,592.43: [(X)/(.05-.03)] x [(1.05)40 - (1.03)40] = 711,592.43 X = $3,767.08

1. If Mrs. Beach wanted to invest a lump sum of money today to have $100,000 when she retired at 65 (she is 40 years old today) how much of a deposit would she have to make if the interest rate on the C.D. was 5%?

An investment firm with the name of J.D.Williams, Inc. helps many of its clients invest over $120 million for the last 40 years. We have many personal investors helping many individuals with their investments. We create personalized plans for our clients depending on their needs. Our company has multiple methods to help its clients with investments. We use many different approaches when it comes to assessing and making an appropriate plan for the investment.

When people are asked how people will plan or rethink for retirement, the first thing that people will think about, is saving. There are some positive ways to save money, the author suggests to the readers to sign up for 401(k) plan. It is a plan help employees save for retirement, 401(k) should allow anyone to build up a nice nest egg. For example, “In Dave Ramsey’s The Total Money Makeover, for instance, he gives us “Joe and Suzy Average” who invest $7,500 per year ($625 per month) using their tax-free retirement account. They do this from age 30 to 70, getting 12 percent interest per year. At the end, they have $7,588,545 to their names.” When people invest in 401(k) plan, it is safer and more money in retirement and it also has a benefit that you don’t need to pay for tax when you take the money out. Beside 401(k), people prefer to invest money in the stock market for retirement-plan. According to author “ During a recent 40- year period,

The disturbing cost that can be detrimental to the results of an investment such as retirement is the rate of inflation. An inflation rate as low as 4 percent might be small in the present time. However, considering the effect of such an inflation on the future result of a long-term investment, it is evident that it is

Assume that one of Philip’s clients is a married man, aged 36 with two young children, who wishes to reallocate a significant portion of his retirement funds that are currently invested in certificates of deposit. Philip recommends a growth investment, and he identifies the three representative possibilities shown in Table A.

You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5.5 percent. How much money must you deposit in account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college

The U.S Department of Labor projects that a retiree will need to replace between 70 and 90 percent of his or her before-retirement income to maintain your usual standard of living. Assuming that the older couple have been saving up years to make retirement a priority it is possible to reach that goal. The sooner you start saving, the more time your money has to grow. The average American spends 20 years I retirement, women could live more. The couple would need to calculate retirement assets, savings and expenses to know how much money they would need

Both Blunt and Mathas knew this would be an uphill battle, however. Historically, investment advisors preferred to actively manage their clients’ funds, whereas an immediate annuity represented an irrevocable one-time transaction. In addition, most advisors favored a fee-based business model rather than one in which they would receive only a one-time commission. Complicating matters, research suggested that consumers were almost completely unaware of the existence or benefits of immediate annuities. Yet Mathas had faced doubts about this product before, and he genuinely believed that, in the ever-changing landscape of retirement planning, immediate annuities offered great benefits for those in or approaching their retirement years.