Investing Project

Read Complete Research Material


Investing Project

Investing Project

About Wilcox

Louis Wilcox is a 45 year old man, who lives with his wife and daughter. He just won $100,000(excluding taxes) in Lumiere Place Casino. He will be retired after 20 years as the retirement age in United Kingdom is 65 years. Therefore, in order to have secure future, he wants to invest his winnings of $100,000 by creating a portfolio today that would help him to meet the financial obligations after he turns 65 years of age. Mr. Wilcox wants the investment to be safe and secure; it should be such that the principal is protected. He is risk averse and does not want to assume more risk; therefore he prefers a diversified portfolio and is willing to invest in 3 companies, 3 mutual funds and a bond.

Investment Portfolio

In this I examined taking a $100,000 portfolio and buying into it in the TSE but taking out $5,000 per year in inflation modified dollars. This examined 10 year time span with genuine market outcomes and equivalent inflation rates with those returns. The concept is to glimpse how long $5,000 in genuine buying power could be taken from the portfolio before it would be utilised up. Inflation of 3% doesn't appear like very much but a 55 year vintage who leaves could glimpse his buying power of that $5,000 slash in half by the age of 79. So I liked to adapt the $5,000 for inflation.

Take the $100,000 bought into in the supply market in 1955 and take out $5,000 each year. The market was up 11.7% that year and inflation was only 1.4%. According to my computed outcomes you would have had $106,689 at the end of the year. I preceded this on to glimpse when the cash would run out. You could have proceeded to take out $5,000 in inflation modified dollars till 1997. The initial $5,000 would have developed to payments of $31,994 by 1997. Your initial $100,000 would have been completely utilised up after 42 years. Someone leaving at age 55 could have sustained the payments till age 97.

If the identical workout was finished just 10 years subsequent in 1965 the identical $100,000 would have continued till 1991 or 26 years. The initial $5,000 payments in 1965 would have developed to $24,563 by 1991 when they would have been all utilised up. The 55 year vintage retiree would glimpse his capital tired round his life expectancy at age 81. This is rather a bit shorter then in the preceding example. The limitation in the time border was due to higher inflation and poor supply markets.

·  First, identify that this scheme is best put to use for investors with an buying into time horizon of not less than five years. It is preferable to have a time horizon of 10 to 20 years. In this demonstration with our $100,000 portfolio, we will use a 10 year buying into time horizon. In your case, you should first work out your ...
Related Ads