I have received an inheritance for which I need to make wise investment decisions. I have received a $100,000 inheritance and would like to invest. Since I recognize the importance of diversification, invest the amount in a variety of financial instruments.
1. Decide on a good investment mix; in other words, decide what percentage of the inheritance will be invested in stocks, bonds, and cash. Allocate a specific dollar amount to each type of investment. An example might be: stocks, $60,000; bonds, $30,000; cash, $10,000.
2. Use the Cybrary to research various investments of interest. Go to some of the leading sites that deal with stock, bond, and mutual fund investments.
3. Divide the stock investments in your portfolio between mutual stock funds and common stocks. For each stock or stock fund, find and list: the 52-week highs and lows, the current price, and the Beta value. Stocks are typically purchased in lots 0f 100. Stock mutual funds sometimes require a minimum dollar amount (e.g. $2,500) that may be spent on an initial purchase.
4. Divide the bond investments in your portfolio between treasury, corporate and municipal bonds (or bond funds). List bonds by type, yield, and maturity.
5. Select a money market fund for cash investments. All of the major brokerage houses offer them.
6. Create a table showing all the investments, the number of shares purchased, the purchase price per share, and the total cost. Remember that the sum of all investments must not exceed $100,000. Include a right hand column in the table for an explanation of why you selected the particular investment.
There is no statutory amount that an investor needs to invest in order to generate adequate returns from his savings. The amount of investment will eventually depend on factors such as:
Equities: Investment in shares of companies is investing in equities. There are two streams of revenue generation from this form of investment.
1. Dividend: Periodic payments made out of the company's profits are termed as dividends.
2. Growth: The price of a stock appreciates commensurate to the growth posted by the company resulting in capital appreciation.
On an average an investment in equities in has a given higher return with higher risks attached to it.
Bonds: It is a fixed income (debt) instrument issued ...
This explains the steps for Personal Finance Investments
Portfolio Management for personal financial planning
Cliff Swatner is single, 33, and owns a condominium in New York City worth $250,000. Cliff is an attorney and doing well financially. His income last year exceeded $90,000, and he has sufficient liquid assets to supplement his condominium and other tangible assets. Several years ago, Cliff began investing in stocks and bonds. He made his selections on the basis of articles he read describing good investment opportunities. Some have worked well for Cliff, but others have not. Cliff has never taken the time to evaluate his portfolio performance, but he feels it isn't very good. Cliff currently has about $90,000 invested. He has been dating a woman lately and hopes to marry her in three years, at which time he will need $20,000 for marriage expenses and a honeymoon. Cliff's only other objective is to accumulate funds for retirement, but he does not have a specific dollar target for this goal. Cliff feels that he has a moderate risk-tolerance level.
1.Explain some disadvantages of Cliff's current investment approach.
2.Construct a portfolio for Cliff, limiting your selections to mutual funds (assume that he sells his current stock and bond holdings). Make sure your plan indicates specific dollar amounts for each portfolio component.
3.Explain how Cliff should periodically rebalance his portfolio, indicating how frequently rebalancing should be done.View Full Posting Details