Life Situation Financial Data Pam, 43 Josh, 45 Children ages 16, 14, and 11 Mont
ID: 2640009 • Letter: L
Question
Life Situation
Financial Data
Pam, 43
Josh, 45
Children ages 16, 14, and 11
Monthly income $4,900
Assets $262,700
Liabilities $84,600
Living expenses $4,450
Emergency fund $5,000
As previously noted, the Brocks have some of their investment portfolio in conservative stocks. These equities have had very slow growth while regularly paying a small dividend.
Pam and Josh have received several e-mails recently with suggestions about various biotechnology, retailing, and environmental companies. The investment advisers believe that these industries would provide an opportunity for strong long-term financial gains.
In recent years, the Brocks have made extensive use of mutual funds in their investment portfolio. However, they are concerned that their selection of the funds may not be coordinated. With over 9,200 different mutual funds available, this financial marketplace is confusing.
The Brocks start the evaluation process by connecting various types of mutual funds to their investments goals. Next, they assess the past performance and management of the funds. Finally, they talk with various financial advisers and other investors to gather additional information.
Questions
Q1. According to Pam, "We both know we should have started our investment program sooner, but we always seemed to have 'emergencies' that took what extra money we had." To what extent should the Brocks invest in stocks as a major portion of their investment portfolio?
Q2. Research the industries recommended by the investment advisers. What are some industries and specific stocks you would recommend for the Brocks?
Q3. How might Pam and Josh use mutual funds for various investment goals?
Q4. What types of mutual funds might be considered by the Brocks for their investment portfolio?
Life Situation
Financial Data
Pam, 43
Josh, 45
Children ages 16, 14, and 11
Monthly income $4,900
Assets $262,700
Liabilities $84,600
Living expenses $4,450
Emergency fund $5,000
As previously noted, the Brocks have some of their investment portfolio in conservative stocks. These equities have had very slow growth while regularly paying a small dividend.
Pam and Josh have received several e-mails recently with suggestions about various biotechnology, retailing, and environmental companies. The investment advisers believe that these industries would provide an opportunity for strong long-term financial gains.
In recent years, the Brocks have made extensive use of mutual funds in their investment portfolio. However, they are concerned that their selection of the funds may not be coordinated. With over 9,200 different mutual funds available, this financial marketplace is confusing.
The Brocks start the evaluation process by connecting various types of mutual funds to their investments goals. Next, they assess the past performance and management of the funds. Finally, they talk with various financial advisers and other investors to gather additional information.
Questions
Q1. According to Pam, "We both know we should have started our investment program sooner, but we always seemed to have 'emergencies' that took what extra money we had." To what extent should the Brocks invest in stocks as a major portion of their investment portfolio?
Q2. Research the industries recommended by the investment advisers. What are some industries and specific stocks you would recommend for the Brocks?
Q3. How might Pam and Josh use mutual funds for various investment goals?
Q4. What types of mutual funds might be considered by the Brocks for their investment portfolio?
Explanation / Answer
ANS1) 60% in stocks and 40% in Bonds.
ANS2) I would prefer Biotechnology and Environemental companies as they provide a consistent CAGR growth rate overtime and they are not much interest rate sensitive.Investment in co, should be in Rolta,Praj Industries..
ANS3)Not clear exactly
ANS4)Investments in mutual funds will be as per the goals defined and its time horizon.It maybe for buying a house which needs a equity oriented mutual fund for longer horizon.Maybe for children's education which needs a balanced mutual fund,comprising both stocks and bonds.
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