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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 22 2021
133 Votes
Data Assumed in the Solution:
Cu
ent Age: 23 years
Retirement Age: 58 years
Years to Retirement: 35 years
Years after Retirement: 25 years
Money Spend Yearly After Retirement: $154000
To earn yearly $154000 @ 5% p.a. the portfolio value should be $3,080,000 (154000/5%)
Cu
ent Saving: $100000
Annual Deposits: $50000
Investment Style: Risk Taking
Selected Fund: Fidelity 401(k) plan
Investments chosen for Portfolio:
    S.No.
    Name
    Assets Class
    Category
    1
    FID Growth Company (FDGRX)
    Stock Investments
    Large Cap
    2
    FID SEL IT Services (FBSOX)
    Stock Investments
    Mid Cap
    3
    FID SMALL CAP GROWTH (FCPGX)
    Stock Investments
    Small Cap
    4
    FID PACIFIC BASIN (FPBFX)
    Stock Investments
    International
    5
    FID SEL SOFTWARE (FSCSX)
    Stock Investments
    Speciality
    6
    FID PURITAN (FPURX)
    Blended Investments
    N/A
    7
    FID LT TR BD IDX (FUAMX)
    Bond Investments
    Income
    8
    FID GOVT MMRK PRM (FZCXX)
    Short Term...
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