busi 538

INVESTMENT PROJECT: IMP & ISP

BUSI 538-D01

Dawn Livingston

AGENDA

Purpose: Policies and Guidelines

Goals, Objectives, & Constraints

Duties & Responsibilities

Asset Allocations, Strategies, & Investment Styles

Guidelines for Rebalance/Feedback

OBJECTIVES

 Ability to pay expenses with income left to save

 Plan to control liquid assets:  Day to day expenses

 Save for retirement

 Save for college funds for her children

 Ability to retire in 20-30 years comfortably.  Pay down student loans and any other debt

CONSTRAINTS  Liquid assets to pay loans

 Liquid assets to invest in college funds and day to day expenses.

 Mortgage expenses

 15 year investment horizon on student loans

 Moderate Risk Tolerance:  Balance debt to income

BRIEF DESCRIPTION  Dawn has started a new career path that has lead her

into the accounting world with a growing salary to help provide for her two little ones and husband. With the impeding student loans to come, she is seeking the advice on being able to start saving for retirement with the income necessary to provide a comfortable retirement.

PURPOSE  The purpose of this investment policy and

portfolio is to provide a clear plan on how to maintain and increase income while working to decrease loan debt.

POLICIES & GUIDELINES

 First 5 years: prepare to pay for loans/80k per year

 10 years: goal to increase income to $100k

 15 years: expenses lower than income

 20 years: $100k in savings for student loans

ASSET ALLOCATION

Profile Age 34 Current assets $80,000 Savings per year $5,000 Income required 3% Marginal tax rate 28% Risk tolerance Balanced (5 scale of 0 to 10) Economic outlook Moderate (5 scale of 0 to 10) Suggested Asset Allocation Stocks 77% $61,600 Bonds 12% $9,600 Cash 11% $8,800

https://www.bankrate.com/calculators/retirement/asset-allocation.aspx

SECURITY SELECTION

  If you cannot predict which stocks will be winners, you should broadly diversify your portfolio to avoid putting all your eggs in one basket” (Bodie, Kane, & Marcus, 2017, p. 720).

 Diversify into different options to be able to be more profitable.

 Research what will give the best return before retirement.

STRATEGIES

 Strategy  Choose 5 stocks to invest in

 3 bonds to invest in

 Work to increase income to 80k per year

FEEDBACK

 Monitoring & Rebalancing: manages ongoing exposures to investments (Maginn, Tuttle, McLeavey, & Pinto, 5.3.1).  Having a balance between assets and

liabilities

 Meet back in 6 months to check on progress of goals.

REFERENCES

 Bodie, Z., Kave, A. & Marcus, A. (2017). Investments and Derivatives. Liberty University: School of Business. Published by McGraw-Hill Education.

 Maginn, J. L., Tuttle, D. L., McLeavey, D. W., & Pinto, J. E. (2007). Managing Investment Portfolios: A Dynamic Process. CFA Institute Investment Series.