moderately conservative asset allocation looks like B u s i n e s s F i n a n c e

FINAL PROJECT (10% of grade)

You are going to work with clients to help make recommendations on a variety of questions they have related to their financial situation.

Below is key information and the type of advice they are looking for. Your job is to analyze their situation, make recommendations and explain your rationale. It is very important to explain the WHY of all your recommendations.

More specific information will be provided in class and the info provided here may be updated and expanded. So check back.

DUE Thurs, DEC 10th.

YOU WILL USE THIS WORKSHEET TO PROVIDE YOUR ANSWERS. (THIS IS WHAT WILL BE UPLOADED)

STUDYPOOL: SHEET IS ATTACHED TO THIS POSTED QUESTION

INFO & DATA

YOUR CLIENT

Phil & Claire Dunphy, ages 48 and 46, respectively

Chidren:

Haley, female, age 17

Alex, female, age 14

Luke, male, age 12

The Dunphy’s came upon some money due to an inheritance from a distant relative. They have $100,000 to invest. They don’t yet have a specific goal for this money but don’t think they will need it for 10-15 years.

They consider themselves MODERATELY CONSERVATIVE investors which means they do not like market fluctuations but they understand they need to own the right stocks for long-term growth. Phil is a more nervous investor than Claire and gets anxious when the stock market goes down significantly.

Their current investments are as follows:

Phil:

SEP IRA – $180,000

Invested in dividend paying stocks, several bond mutual funds and cash.

Claire is the named beneficiary

Claire:

Old 401k from former employer – $45,000

All invested in LADVX

Phil is the named beneficiary

SEP IRA – $75,000

All invested in OAKIX

Phil is the named beneficiary

Joint assets held as Joint Tenants with Rights of Survivorship (JTWROS)

Account #1 – $60,000 (for children’s college expenses)

Invested in Blue Chip stocks (about 10 stocks total)

Account #2 – $25,000 (for future needs for themselves)

Invested in bond mutual funds

Account #3 – $8,000 savings account

PART 1: The Inheritance (40 points)

The Dunphy’s want assistance to invest their inheritance.

1) ASSET ALLOCATION: Your first step is to provide them with a Moderately Conservative asset allocation. Please provide the % stocks, bonds and cash that fits their risk tolerance and timeframe.

% Stocks

% Bonds

% Cash

Do research on what a Moderately Conservative asset allocation looks like.

2) INVESTMENT RECOMMENDATIONS: To start, you are going to provide examples of the type of investments the Dunphy’s should have when they invest their inheritance.

Please provide:

4 stocks

1 mutual fund

1 ETF

For each recommendation please provide your rationale for selecting that investment and why it fits their risk tolerance and asset allocation.

HELP: The number of investments available to you can seem overwhelming. Here are some places to explore to get you started. Remember, Google is your friend.

The DOW 30 are companies that reflect the current makeup of the U.S. economy
S&P 500 are the 500 largest publicly traded companies
Morningstar has a 5-star rating system for mutual funds. Just Googling mutual funds that invest in bonds; or mutual funds that have large company stocks will yield results to help your search.
You can also Google most popular ETFs or mutual funds
To get ideas about different sectors of the market see: https:// class=”screenreader-only”> (Links to an external site.)

Sources that you may find valuable for your research include:

MarketWatch: http:// class=”screenreader-only”> (Links to an external site.)
Wall Street Journal: class=”screenreader-only”> (Links to an external site.)

Yahoo Finance: yahoo.com (Links to an external site.)

Bloomberg: bloomberg.com (Links to an external site.)
Morningstar: morningstar.com (Links to an external site.)

PART 2: RETIREMENT (30 points)

INVESTMENTS REVIEW: The Dunphy’s would like you to take a look at the investments in their retirement accounts. Please keep in mind their risk tolerance and consider the best allocation for them.

1) Phil SEP IRA: Is he properly invested?Recommendations?

2) Claire’s old 401(k): Is it properly invested? Recommendations?

3) Claire’s current SEP IRA: Is it properly invested? Recommendations?

Be sure to explain your rationale for your answers.

PART 3: ESTATE PLANNING (20 points)

The Dunphy’s have not done any estate planning.

Please provide three actions they should take related to estate planning. Explain your rationale for each action and how they can put your recommendation into action.

PART 4: ONE MORE RECOMMENDATION (10 points)

Look over their situation again and make one more recommendation. Consider their other assets, their children, etc.

What is your recommendation and what is your rationale? How can they implement the recommendation?