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If you will live for X years after retirement and the estimated return for your investment portfolio is 5% annually at that time, how will you decide your retirement plan? You should first think about...

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If you will live for X years after retirement and the estimated return for your investment portfolio is 5% annually at that time, how will you decide your retirement plan? You should first think about how many years you will live, how much money you will spend yearly after retirement, and how your investment style is, such as risk averse or risk taking. Then, you set your investment objective and decide your retirement age. Finally, try to form your portfolio by selecting funds from either “Fidelity 401(k) plan” or “Hines 401(k) plan” and allocating your assets, and to evaluate your possible returns and risk. There are no fixed rules for the choice of your portfolio. However, you will not benefit by only investing in one or two funds.

Will your portfolio achieve your target by the age of retirement?

Answered Same Day Jul 21, 2021

Solution

Sumit answered on Jul 23 2021
143 Votes
Data Assumed in the Solution:
Cu
ent Age: 24 years
Retirement Age: 60 years
Years to Retirement: 36 years
Years after Retirement: 32 years
Money Spend Yearly After Retirement: $225000
Portfolio value needed to earn $225000 @ 5%: $4,500,000 (225000 / 5%)
Cu
ent Savings: $200,000
Annual Investment: $100,000
Investment Style: Risk Averse
Investment Objective: Savings for Retirement
Selected Fund: Fidelity 401(k) plan
My Portfolio:
    S.No.
    Name
    Assets Class
    Category
    1
    FID FOCUSED STOCK (FTQGX)
    Stock Investments
    Large Cap
    2
    FID GROWTH STRAT (FDEGX)
    Stock Investments
    Mid Cap
    3
    FID SMALL CAP GROWTH (FCPGX)
    Stock Investments
    Small Cap
    4
    FID BLUE CHIIP GR (FBGRX)
    Stock Investments
    Large Cap
    5
    FID INTL REAL ESTATE (FIREX)
    Stock Investments
    Speciality
    6
    FID STRAT DIV & INC (FSDIX)
    Blended Investments
    N/A
I have chosen the portfolio based on long term objectives; hence...
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