Tony is now 65 years old, and has no property. He has $6 million in a saving account, and is now worrying about insufficient financial resource for his retirement. Identify two investment portfolio.
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Tony is now 65 years old, and has no property. He has $6 million in a saving account, and is now worrying about insufficient financial resource for his retirement.
Identify two investment portfolio.
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- John is forty years old, and works in the Private Sector. He feels it is still too early to worry about old age, and does not have a systematic investment plan. His focus is very much on the quality of life at present. As his financial planner, discuss the types of risks he is likely to face post retirementOld Alfred Road, who is well-known to drivers on the Maine Turnpike, has reached his 70th birthday and is ready to retire. Mr. Road has no formal training in finance but has saved his money and invested carefully. Mr. Road owns his home - the mortgage is paid off - and does not want to move. He is a widower, and he wants to bequeath the house and any remaining assets to his daughter. He has accumulated savings of $180,000. The investments are yielding 9% interest. Mr. Road also has $12,000 in a savings account at 5% interest. He wants to keep the savings account intact for unexpected expenses or emergencies. Mr. Road's basic living expenses now average about $1,500 per month, and he plans to spend $500 per month on travel and hobbies. To maintain this planned standard of living, he will have to rely on his investment portfolio. The interest from the portfolio is $16,200 per year (9% of $180,000), or $1,350 per month. Mr. Road will also receive $750 per month in Social Security payments…Gary wants to save $555,000 in 5 years, he currently has $225,000 in an investment. Due to financialconstraints, he is unable to add to this investment. What interest rate must he earn to achieve his goal?
- A manager retired at age 65, and has her retirement savings of $650,000 invested in a mutual fund composed of 30% treasury bonds and 70% stocks. She needs $65,000 per year for living expenses, in addition to her social security benefit. How long will her investment last if there is no inflation?John and Janet are both 61 years old, and they are still working at their current jobs. Neither one of them plans to retire until age 67. They sold their main home, and with the proceeds from the sale, they purchased a condominium and paid for it in full. They have $104,000 left in the bank. Which investment vehicle is appropriate if they want to avoid losing any of the money and use it all for their retirement?Sam is currently 30 years of age. He owns his own business and wants to retire at the age of 60. He has little confidence in the Social Security system. He wants to retire with an annual income of $72,000. a. If Sam believes he will live to age 90, how much does he have to accumulate by the time he reaches age 60 to receive $72,000 at the end of each year for the rest of his life? Sam believes he can earn 8 percent on his money in a stock mutual fund. $810,560.40 b. How much does he have to accumulate if he wants the payment of $72,000 at the beginning of each year? $875,405.23 c. What dollar amount of interest will Sam have earned during retirement if he receives his $72,000 at the beginning of each year?
- The expenses associated with sending two children through college prevented Victor and Maria Hernandez from adding substantially to their investment program. Now that their younger son, Joseph, has completed school and is working full time. They would like to build up their investments quickly. Victor is 47 years old and wants to retire early, perhaps by age 60. In addition to the retirement program at his place of employment, Victor believes that their investment portfolio, currently valued at $115,000, will need to triple to $345,000 by his planned retirement time, in 13 years. He and Maria realize that they will have to sacrifice a lot of current spending to save and invest for retirement. What rate of return is needed on the $115,000 portfolio to reach their goal of $345,000 (assuming no additional contributions)? Use Appendix A-1 or visit the Garman/Forgue companion website. Round your answer to the nearest whole number. Round ‘Future Value of a Single Amount’ in intermediate…A 55 year old executive is considering retiring and asks your opinion whether it would be better for him to gift $500,000 ( in cash) to his only daughter or invest the $500,000 and bequeath the $500,000 plus earnings to his daughter in his will. The executive is healthy and expects to live at least another 20 years. His entire estate is expected to be in excess of the exclusion amount. What advice would you give the executive? Explain your reasoning including any assumptions as to taxes, earnings rates on investments, spending patterns, potential changes in tax law, and so on. Would your answer be different if he wanted to give stock which has significantly appreciated since he purchased it? In the alternative, how might the annual gift tax exclusion be used to transfer value to his daughter?Sam is currently 30 years of age. He owns his own business and wantsto retire at the age of 60. He has little confidence in the current SocialSecurity system. He wants to retire with an annual income of $72,000a year.a. If Sam believes he will live to age 90, how much does he have to accumulateby the time he reaches age 60 to receive $72,000 at the end of each yearfor the rest of his life? Sam believes he can earn 8 percent on his money in astock mutual fund.b. How much does he have to accumulate if he wants the payment of $72,000at the beginning of each year?c. What dollar amount of interest will Sam have earned during retirement if hereceives his $72,000 at the beginning of each year?
- Jerry, who is age 56, was just called into the president’s office at Napa Sunrise, Inc. He just learned that his position has been eliminated in the recent reorganization. While he is devastated, he thinks he may attempt to retire and work on his golf game. Jerry has a retirement plan at Napa Sunrise, which permits lump-sum distributions, and has accumulated some personal savings, but not enough to sustain him until age 65. Jerry also worked for KMA for 30 years and expects to receive a pension from KMA at age 65. He also expects to receive Social Security at age 67. Which of the following is correct? A. Jerry could begin taking substantially equal periodic payments, which would avoid the early withdrawal penalty, but he could not stop the payments until age 59 ½. B. Jerry cannot access his funds at Napa Sunrise prior to full retirement age for the plan. C. Jerry can take any distribution permitted by the Napa Sunrise plan and avoid the early withdrawal penalty…Nadine is retiring at age 62 and expects to live to age 85. On the day she retires, she has $1,650,000 in her retirement savings account. She is somewhat conservative with her money and expects to earn 6 percent during her retirement years. How much can she withdraw from her retirement savings each month if she plans on giving $300,000 to her grandson on the morning of her death?Carlos opens a dry cleaning store during the year. He invests 30,000 of his own money and borrows 60,000 from a local bank. He uses 40,000 of the loan to buy a building and the remaining 20,000 for equipment. During the first year, the store has a loss of 24,000. How much of the loss can Carlos deduct if the loan from the bank is nonrecourse? How much does Carlos have at risk at the end of the first year?
