argosy math111 module 5 assignment 1

Assignment 1: Saving for Retirement
You may often wonder how to retire comfortably. The most
common way is to contribute every month to a retirement account during your
working years.
In a typical retirement plan or a savings plan, it is
assumed that there will be equal payments each month and tha any interest
earned by the plan each month will be added back into the principal. In this
way, the plan builds value based upon successive contributions and calculated
interest.
In most retirement plans, your money is distributed across
different types of investments—this is known as your portfolio. In this
assignment, you will manage an imaginary portfolio and determine the optimum
contributions you must make to each category in your portfolio to achieve your
retirement goals.
In this assignment, you will
use a simple version of a portfolio where your money is distributed across
three categories: stocks, bonds, and cash. Refer to this module’s readings to
review historical return values.

Category

Average Annual Return

Stocks

6.0%

Bonds

2.1%

Cash

1.0%

Your
portfolio will be diversified across these three different types of
investments. The amount that you decide to put into each will greatly depend
upon what stage of life you are in. If you are young and just starting out in
your career, you may want to have a high-risk portfolio with the hope of high
returns in the distant future.
However, if you are near the end of your career, you may
want to choose a less risky portfolio.
Create your own portfolio that addresses the following:
• After
retirement, how much will you like to have annually in order to maintain the
standard of living that you expect to have?

• How
much annually do you plan to set aside for your retirement plan?
• How
much of this annual contribution will you want to invest in each of the investment
categories?
• How
many years will you work from now until you retire?
.next.ecollege.com/pub/content/baf6da6c-db8e-4958-a53f-14fc5683d107/AUO_MAT111_M5A1_SavingforRetirement.xls”>Click here.next.ecollege.com/pub/content/baf6da6c-db8e-4958-a53f-14fc5683d107/AUO_MAT111_M5A1_SavingforRetirement.xls”>to
download the retirement Excel spreadsheet you will need for this assignment.
Put the values that you decided on above into the retirement
spreadsheet.
Respond to the following in a 3–4-page Microsoft Word
document:
• What
is your retirement goal? Can you realistically reach the goal that you have
set? How long will it take to achieve this retirement goal?
• How
much money will you need to save in order to achieve your retirement goal?
• This
assignment assumes that the interest rates will remain constant for the entire
life of the retirement plan. Is this a realistic situation?
• Are
you planning to have a high-risk or a low-risk portfolio? Explain.
• What
other factors related to contributing to the typical retirement plan must you
consider when managing your portfolio?
• What
impact will inflation have on your calculations?
Apply APA
standards to citation of sources. Name your Word document as follows:
LastnameFirstInitial_M5_A1.doc.
Submit it to the M5: Assignment 1 Dropbox by Saturday, July 18, 2015. Grading
Criteria and Rubric

Assignment 1
Grading Criteria

Maximum

Points

Explained the retirement goal and a way to realistically
achieve it within a stipulated time.

52

Calculated the
money that is required to be saved to achieve the retirement goal.

40

Examined whether interest rates can remain constant through
the life of the retirement plan.

40

Explained in detail the choice of a high-risk or low-risk
portfolio.

24

Examined other factors that may contribute to the retirement
plan.
Wrote in a clear, concise, and organized manner;

24

demonstrated ethical scholarship in accurate representation
and attribution of sources; displayed accurate spelling, grammar, and
punctuation.

20

Total:

200