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Personal Finance and Investment Opportunities

Pam, 43
Josh, 45
Children ages 16, 14, and 11

Monthly income $4,900
Living expenses $4,450
Emergency fund $5,000
Assets $262,700
Liabilities $84,600

With three dependent children, the Brocks are assessing their life insurance. Pam has $5,000 of coverage. Josh has life insurance coverage equal to approximately eight times his annual salary.

With approximately 20 years to retirement, Pam and Josh Brock want to establish a more aggressive investment program to accumulate funds for their long-term financial needs. Josh does have a retirement program at work. This money, about $110,000, is invested in various conservative mutual funds.
In addition, the Brocks established their own investment program about four years ago, and today they have about $36,000 invested in conservative stocks and mutual funds. In addition to their investment program, the Brocks have accumulated $11,000 to help pay for the children's college educations. Also, they have $5,000 tucked away in a savings account that serves as the family's emergency fund. Finally, both will qualify for Social Security when they reach retirement age.

Given that Pam is 43 and Josh is 45 and they have three children who will soon begin their college educations, what investment goals would be most appropriate? *2 paragraphs is sufficient*

Solution Preview

Few changes and modifications can help them start saving more for retirement and the college education for all three of their kids. Also a few suggestions to improve that is suggested by many financial experts.
- Emergency funds usually should be 3 months of living expenses
- See where they can reduce monthly expenses - take out the unnecessary such as eating out every other day or shopping every weekend etc
- Also see where they can reduce their liabilities - pay off things sooner if possible
- Josh can put in the max in the retirement account and see how much or if his organization does a match of a certain percentage saved. Most employers with a 401(k) plan match a fixed percentage of the employee's contribution.
- Pam and Josh can ...

Solution Summary

People in their 40s need to look at many aspects of their expenses and goals, but also need to focus on their retirement. They need to evaluate where they stand today and what changes they would need to make to reach their goals for the family and themselves personally.