Investment Planning Proposal

Imagine you are meeting with friends to discuss the importance of investments as part of a retirement plan.

Read the following summaries of the financial situation and goals of two of your friends:

Kathy

Kathy is a 28-year-old, single mother of twin boys. She has been working as a public relations media specialist for three years, having worked at the same company where she started out answering the phones. She has her B.A. in Communications and a student loan of $20,000 she has not yet begun to pay off. Her job pays $70,000 a year.

She receive no financial support from the father of her twins. Her costs include paying for childcare, credit cards, and a mortgage. She is able to set aside between $200-325 a month in a savings account.Her financial goals are to pay off the remaining $1,000 of her credit card debt, and to begin contributing to a retirement plan. Her employer offers a 401k with a 3% match, and she is not yet enrolled in that plan.

Jackson

Jackson is a recently graduated 44-year-old, single man. He earned his B.S. in Criminal Justice and just recently started a job at the local police department earning $45,000 a year. Jackson pays child support for one child from a previous marriage. His student loans total $30,000, and he has no other debt at this time. He expects to have $200 a month to contribute toward his goals of owning a home and having a more secure retirement.

Chooseone friend and write an APA-formatted, 3- to 4-page proposal advising a friend about investing for the future. The text of your proposal should be a minimum of 700 words. You may add any graphics or illustrations that support your proposal.

Address the following in your proposal:

• Why is investment planning important?

• How would you suggest your friend start retirement planning? What steps should he/she take to start?

• What investment strategy would you suggest? Why? (Note: Your strategy should explain how money could be invested in stocks, bonds, mutual funds or a mix of all.)

• Of what risks and rewards of investing should your friend be aware?

• How could your friend minimize the risks associated with investing risk?

• Provide two to three resources you would offer to your friend to continue learning more about investments and retirement planning and discuss how these can help.

Your paper must cite two to three academic resources (only one source can be your class textbook).

Retirement Planning Worksheet

Complete Parts I and II of the Retirement Planning Worksheet.

Part I: Retirement Planning

1. Estimate your retirement income.

You will be asked to answer six questions. If you are unsure of what the fields are, the definitions are below on the same page. There are some assumptions about how much your investments will earn, inflation rates and tax rate; you can edit these to see how they impact the calculation.

• Based on your inputs, what is your estimated monthly retirement income before tax/inflation?

• Based on your inputs, what is your estimated monthly retirement income after tax/inflation?

2. Determine how your current retirement strategy will provide for retirement income.

You will be asked to answer eight questions. If you are unsure of what the fields are, the definitions are below on the same page. There are some assumptions about how much your investments will earn, inflation rates, and if Social Security income is considered; you can edit these to see how they impact the calculation.

• Based on your inputs, how much will you have saved using your current strategy? At what age are your savings expected to run out?

• Assume that your savings will not be sufficient to cover your living expenses. In at least 100 words, what steps can you take now and/or in retirement to live comfortably in retirement?

3. Forecast when you could become a millionaire.

You will be asked to answer four questions. If you are unsure of what the fields are, the definitions are below on the same page.

• How long will it take you to reach $1 million in savings?

• How many years will it be before you reach $1 million in savings?

• Thinking of what your life might be like in retirement, would $1 million be sufficient to support yourself? (Some things to consider would be your health, where you live, and how much money you owe.) In at least 100 words explain why or why not?

4. Define the differences between a 401K and Roth IRA in at least 50 words.

5. Determine whether a Roth IRA or traditional IRA will lead to higher earnings. Input your current age, estimated age at retirement, annual salary, and annual IRA contribution you expect to make in this calculator.

• Provide a summary of the results. Would a Roth IRA or traditional IRA lead to higher earnings based on your inputs?

• Change the inputs in the calculator to see different scenarios. Provide one scenario/combination of inputs in which the Roth IRA leads to higher earnings than a traditional IRA, and summarize the main reason provided in the report for why this is so. Then, provide one scenario/combination of inputs in which the traditional IRA leads to higher earnings than a Roth IRA, and summarize the main reason provided in the report for why this is so. Response should be at least 50 words.

Part II: Note to Self

After reviewing the information provided above, write a brief, summative "Note to Self" regarding how you should plan for your future retirement. How will you use what you have learned in this course to plan ahead, and how will the answers you entered above factor in? Responses should be between 260 to 350 words.