StudentShare solutions
Triangle menu

Retirement Planning - Assignment Example

Not dowloaded yet

Extract of sample
Retirement Planning

The purpose of this paper is to discuss the different investment alternatives that I can use to develop a solid retirement plan. The biggest investment that people have is their homes. Despite the falling real estate market that occurred as a consequence of the recession of 2008 homes historically gain a lot of value over time. In 2012 the value of homes in America rose by 5.9% (Humphries, 2013). Buying a home is the first step towards financial independence. People that pay rent are throwing their money in the trash. An advantage of purchasing a home is that the interests from the mortgage on your first home are tax deductible. A good way to create wealth is by purchasing additional homes for rental. The rent typically pays for the majority of the mortgage. Upon retirement age a person can sell their second house to obtain a large sum of money. One of the best places for people to invest money towards their retirement is the stock market. The biggest stock exchange in the world is the New York Stock Exchange (NYSE). The most common investment instruments sold in the stock market are common stocks. A common stock is a security that represents ownership in a corporation (Investopedia, 2013). Owners of common stocks have voting rights. People can earn money from common stocks from equity appreciation and payment of dividends. The price of common stocks fluctuates every day. The average annual return on common stocks is 9.4% (Observationandnotes, 2009). One of best type of stocks to invest in is blue chip stocks. Blue chip stocks are stocks issued by a well know company with an established record of making money and paying dividends (Teweles, Bradley, Teweles, 1992). Three examples of blue chip stocks are Microsoft, McDonald’s, and Dell. Two types of stocks that have higher risks are foreign stocks and penny stocks. The average return of foreign stocks is 15%, but the standard deviation on the return is much higher (Ahl, 2004). Risk adverse investors should stay away from these types of equity instruments particularly penny stocks. Another type of stock that investors are often attracted too is preferred stocks. The difference between a common stock and preferred stock is that preferred stocks do not have voting rights, but dividends are guaranteed. It is important for investors to compile a diversified portfolio. Diversification can help investors lower their overall portfolio risk. The money market is another option for investors that are looking to save money towards retirement age. The money market is a financial market in which funds are borrowed or lend for short periods as distinguished from the capital market for long term funds (Teweles, et al., 1992). The best and most common money market instrument is treasury bills. Treasury bills are 90 day loans that the federal government sells to investors. The best attribute of a treasury bill is that it is a risk free investment. The federal government has never defaulted on its obligations. The federal government also sells debt instruments that mature in six and twelve months. Another popular debt instrument is bonds. A bond is a long term loan that investors give to a governmental agency or a private institution. Bonds sold by corporations are often referred too as commercial paper. An investor that invests in a bond obtains interest known as the coupon rate. Once a ...Show more

Summary

Americans work hard all their lives to support their families. The cost of living in the United States has been steadily climbing for years. It is important for people to put money aside in order to accumulate wealth for retirement. In the past people relied a lot on social security benefits as their main source of income for retirement age…
Author : winnifredbreite
Retirement Planning essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Retirement Planning"
with a personal 20% discount.
Grab the best paper

Related Essays

Retirement Planning
Time is a variable that works in favor of young people if they start their retirement planning early in life. Compound interest works favorably when people accumulate wealth over time. I expect to graduate with a bachelor’s degree in business administration with concentration in finance in December of 2012.
3 pages (750 words) Assignment
Planning Your Financial Future
My intended career is marketing and my target is to get a remuneration package of ?67,000. The core skills in the workplace that I will focus on include: communications the written and the verbal, vital and innovative thinking, team building and cooperation, listening, problem solving, decision making and interpersonal skills.
6 pages (1500 words) Assignment
Personal Retirement
Depending on the objective of the individual, an appropriate personal retirement plan can help the individual to balance current and future consumption by determining amount of current investible funds that is available and vesting them in retirement accounts (Purdue University, 2009, p.18).
5 pages (1250 words) Assignment
Taxation in Estate Planning
Family limited partnership is used as an efficient strategy of minimizing estate tax since it enables transfer of share across generations more easily and at lower rates of taxation as it would have been with partnership holdings. FLP should not be confused with conventional trust because members actually own shares to the business.
5 pages (1250 words) Assignment
Personal Financial Planning
a) The total wealth portfolio of the couple is as follows: David has 80,000 held in a building society 30 day notice account. Given an 8% annual return, he gets to earn 6,400 annually from this investment. He has 760,000 invested in equity unit trusts which earns annually.
12 pages (3000 words) Assignment
Retirement Age
People, therefore, should not be forced to retire since it is clear that people no longer comfortably enjoy their social security. Generally, people do work to cope with the ever rising cost of living come. The cost of living has increased at an incredible rate, but the wage rates have not increased accordingly.
5 pages (1250 words) Assignment
Discussion Week 3 Question 1 Retirement Planning Chapter 4
A pension is amount of money in which one pays or is deducted in order for them to have an income after reaching the age of retirement where they do not have to work. There various ways of calculating the
1 pages (250 words) Assignment
Financial planning
Moreover, business knowledge in a given environment influences the ability of the business to design strategies that would make the company competitive. For instance, the knowledge of the company’s competitors is critical in designing
5 pages (1250 words) Assignment
Retirement
The availability of guidance to the pre-retirees at this stage is wanting. The liberation stage is marked by the first day of retirement. Also referred to as the honeymoon stage, it lasts for about a year (Schieber, 2012).
2 pages (500 words) Assignment
Finance Planning
Their children’s education fund should be constituted within the next few years while buying their home and saving for retirement should be in the long term. The weakness in the Lane’s current
3 pages (750 words) Assignment
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation