Money Management

Your pension

Suppose you have reached retirement. You have saved a good mount of money, say EUR 500,000, but, if you wish to take a currency and and an amount more realistic for your country, please do so. You are now to make a comparison between two approaches to using your wealth to see you through retirement:

A. Establish what yearly pension a life insurance company is prepared to pay you for the rest of your life.

B. You manage your wealth yourself. Set an amount you want to withdraw each year, and estimate what percent you can earn on the outstanding balance.

All you numbers should be realistic for you and your country and your situation.

Do stick to my simplifying conventions about the table reflecting end-year movements and balances, and have a year zero.

Share Analysis

Choose two companies from "Morningstar". One should be a company you might like to invest in and the other one you would avoid.

Using the data on the Morningstar database available in the library, explain the signification of the various financial ratios related to the two companies you have chosen (e.g. Price/Earnings, Price/Book, Price/Sales, Price/Cash Flow, Dividend %).

Prepare a brief description of each company and explain why one attracts you the other not.