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Eco 372 Week 1 Assignment

Decent Essays

Thank you for coming in last week. I have looked at your portfolio, and have some initial observations. These are not specific recommendations, but rather investment issues to think about, based on your specific situation.
Your net portfolio is approximately $1,330,000. This does not include what you reported to be approximately $250,000 in various taxable accounts or any checking, savings or other accounts you may have.
Asset Allocation: Your allocation is approximately 86% stocks, 10% bonds, 3% cash & 1% other from the portion I analyzed. Of the stocks 71% are US & 15% foreign. As far as cap weightings, your portfolio is weighted more towards small cap stocks versus large caps by approximately 10% when compared to total US Stock market averages. …show more content…

Having a handle on expected spending in 6 years will be important in consideration of asset allocation, pension income and portfolio withdrawals.
New Home Strategy: You mentioned that you may consider moving after retirement, and a new home would require a cash outlay of approximately $400,000 versus your current home. Consideration of how you will pay for that will be important (build cash from current savings, gradually sell off some stock holdings in taxable accounts) as well as if or how much of a new mortgage you will hold.
Consider the TSP: Are you familiar with the TSP, the federal savings program that military members are eligible to participate in? There is a bond fund, the G fund that is in effect a high yield savings account in that it pays a higher rate of interest than traditional savings accounts and does not lose money. (Regular bond mutual funds lose money when interest rates rise). Kevin, as long as you are a member of the Guard, you can open a TSP account by contributing a portion of your Guard pay. Then, once established, you can roll other retirement accounts into a TSP account. The G Fund insulates investors from rising rates, in that the return will increase if interest

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