Comparison of Various Personal Retirement InvestmentsPurposeSample Investor BackgroundAssumptionsInvestment OptionsIRA Account401(k)AnnuitiesMutual FundsDiverse PortfolioResourcesComparison of Various Personal Comparison of Various Personal Retirement InvestmentsRetirement InvestmentsEGR 403-01 EGR 403-01 Summer 2005Summer 2005Group #8Group #8Members:Members:Jon Kai-Tsun Chan Jon Kai-Tsun Chan Steven DoyleSteven DoyleSimon MargolisSimon MargolisThomas NanceThomas NanceTal Bezalel NehmadTal Bezalel NehmadPurposePurposeResearch Various Investment Options For Research Various Investment Options For RetirementRetirementHow Do They Compare To Each Other?How Do They Compare To Each Other?Which Yields Most Money For Which Yields Most Money For Retirement?Retirement?Is It Worth The Risk?Is It Worth The Risk?Sample Investor Sample Investor BackgroundBackgroundAge : 25 YearsAge : 25 YearsProjected Retirement Age : 70 YearsProjected Retirement Age : 70 YearsLife Expectancy : 90 YearsLife Expectancy : 90 YearsCollege Graduate, Starts Work At Age 22, College Graduate, Starts Work At Age 22, Starts Saving For Retirement At Age 25Starts Saving For Retirement At Age 25Starting Salary : $55k/year With $1000 Starting Salary : $55k/year With $1000 Increase Each Year To RetirementIncrease Each Year To RetirementSavings For Retirement : 10% Of Salary Per Savings For Retirement : 10% Of Salary Per YearYearInvestor Is Married; Accounted For When Investor Is Married; Accounted For When Filing TaxesFiling TaxesAssumptionsAssumptionsGeneral Average Inflation Rate : 3%General Average Inflation Rate : 3%No Massive Inflation/Depression ErasNo Massive Inflation/Depression ErasNo Situations Requiring Taking Money Out No Situations Requiring Taking Money Out Of Retirement Fund(s)Of Retirement Fund(s)Stable Job(s)Stable Job(s)Investment OptionsInvestment OptionsIRA FundIRA Fund- Roth vs. Traditional- Roth vs. TraditionalCompany 401(k)Company 401(k)- Personal Contribution Only vs. Company Matching & - Personal Contribution Only vs. Company Matching & CD PurchaseCD PurchaseMutual FundsMutual Funds - Domestic vs. International- Domestic vs. InternationalAnnutitiesAnnutities- Fixed vs. Variable- Fixed vs. VariableIRA, 401(k), Mutual Funds & Stock Market At Various IRA, 401(k), Mutual Funds & Stock Market At Various LevelsLevels- Risk vs. Reward- Risk vs. RewardIRA AccountIRA AccountRoth vs. TraditionalRoth vs. TraditionalComparing Earning Power Comparing Earning Power For Each Under Equal For Each Under Equal Circumstances:Circumstances:- Assume Contributions Are - Assume Contributions Are Same For Both IRAsSame For Both IRAs- Taking Into Account Taxes- Taking Into Account Taxes- Not Including Early - Not Including Early Withdrawal Penalties For Withdrawal Penalties For TraditionalTraditional- Balance Of Saved Salary - Balance Of Saved Salary Will Will Be Saved In Credit Be Saved In Credit Union Union At 2% InterestAt 2% InterestFactors For Consideration:Factors For Consideration:- Traditional Contributions - Traditional Contributions Are Are Done Pretax & Taxed Done Pretax & Taxed Upon WithdrawalUpon Withdrawal- Roth Contributions Are - Roth Contributions Are After After Tax Without Tax Tax Without Tax Upon Upon WithdrawalWithdrawal- Maximum Yearly - Maximum Yearly Contribution, Raised Contribution, Raised Upon Age 50Upon Age 50- Age Requirements- Age Requirements- Additional Circumstances - Additional Circumstances Set Set Forth By Investor & Forth By Investor & AssumptionsAssumptions401(k)401(k)Comparison Of Two 401(k) Options:Comparison Of Two 401(k) Options:- All 10% To 401(k)- All 10% To 401(k)- Half Of 10% To 401(k) With 50% - Half Of 10% To 401(k) With 50% Company MatchCompany Match- Other Half To CD With 4% Rate; - Other Half To CD With 4% Rate; Compounded MonthlyCompounded MonthlyRate Of Return – 5%Rate Of Return – 5%AnnuitiesAnnuitiesFixed vs. VariableFixed vs. VariableComparison Of Earning Power Based On:Comparison Of Earning Power Based On:- Fixed Requires $10k minimum & 5+ Years Time- Fixed Requires $10k minimum & 5+ Years Time- Variable Requires 10+ Years- Variable Requires 10+ Years- Interest Rate- Interest Rate- Contribution Amount- Contribution Amount- Risk Levels- Risk Levels- Tax Deferral- Tax Deferral- Periodic Payment Option & For How Long- Periodic Payment Option & For How Long- Age Requirements- Age RequirementsMutual FundsMutual FundsDomestic vs. InternationalDomestic vs. InternationalComparison Based On:Comparison Based On:- Contribution Amount With No Maximum- Contribution Amount With No Maximum- Domestic Management For International - Domestic Management For International FundsFunds- Potential Currency Fluctuations & - Potential Currency Fluctuations & Economic Status For International Economic Status For International FundsFundsDiverse PortfolioDiverse PortfolioIRA, 401(k), Mutual Funds & Stock Market IRA, 401(k), Mutual Funds & Stock Market At Various LevelsAt Various LevelsProfessionally Managed vs. Employee-Professionally Managed vs. Employee-ManagedManagedProfit vs. RiskProfit vs. RiskIt Is Your Money & Your ResponsibilityIt Is Your Money & Your ResponsibilityResourcesResourcesVanguard IRAs : Roth vs. TraditionalVanguard IRAs : Roth vs. TraditionalFidelity IRA AccountsFidelity IRA AccountsBloomberg 401(k) CalculatorBloomberg 401(k) CalculatorCD CalculatorCD CalculatorFidelity Mutual FundsFidelity Mutual FundsThe Vanguard GroupThe Vanguard GroupPrimerica Financial ServicesPrimerica Financial ServicesIRS Income TaxIRS Income Tax Tables
View Full Document
Unlocking...