Finance

Scenario
You are to advise a client about how to best invest $50,000 for retirement. The client is a married couple, ages 35 and 34 and they have $50,000 to invest. They have moderate risk tolerance and a thirty-tear time horizon. You do not need to make recommendations for each spouse separately. Treat them as one client or family. Use percentages to allocate the investments and not dollar-value calculations. You are to create an asset allocation that is appropriate for the next five years. In other words, the client may rebalance every year, but will not change your recommended percentage allocation for five years. Your advice is good for five years.

You will make initial recommendations only. Be sure that each asset class (category) gets a percentage that is appropriate for their age risk tolerance. Within each asset class recommend a variety of assets that gives adequate diversification. It can be comprised of ETFs, mutual funds, bonds, cash, T-bills, real estate investment trusts (REIT) , precious metals, commodities, and alternative investments.

Do not use the family home, land, or rental real estate as an asset choice. Analyze the reasons for choosing each asset class and the investments within the asset class. You do not have to choose a bunch of individual stocks or bonds to accomplish this. You can make the appropriate ETF recommendations to achieve diversification for most, if not all asset classes. You can demonstrate your allocation with graphs as you wish. If you are not using a graph then list each asset class, the investments within the asset class (category), and the percentage allocated to each asset class (category).

Explain the reasons for each asset recommendation that you make. For example, if you are choosing VTI as an appropriate ETF, then state the reason you chose VTI. If you are choosing Apple or Amazon, state your reasons for doing so. Do I have to choose all asset classes mentioned above? No. Chose enough to achieve your objective. Word of advice: A portfolio of just equities (stocks) and bonds is not sufficient. Your charts and graphs are to be in the appendix and not the body of the text. In other words, it does not count towards your two FULL pages of text required.

Course Learning Outcomes

1. Explain the relationship between risk and return, and risk management.

2. Implement basic financial planning concepts and investment strategies.