Fin 340 Milestone One Guidelines And Rubric Overview

Fin 340 Milestone One Guidelines And Rubric Overview: As An Investo

Fin 340 Milestone One Guidelines and Rubric Overview: As an investor for yourself or your clients, you have the job of developing investment objectives and a plan to achieve those objectives and then make subsequent investments in appropriate assets accordingly. This process can be collectively termed “the investment process.” It is helpful to break the process down into the four core concepts that underpin any sound investment process. First, you must understand what you are investing in. You have to know the underlying characteristics of the investment. What type of asset is it? What type of security? How is it priced? What are the expected cash flows? Who are the typical investors and what are their motives? If you do not understand the answers to those questions, then the initial expectations about the value and risk of the asset will be fundamentally flawed. This can lead to missteps and underperformance of your investment objectives.

Second, estimating the value of the asset is crucial. Valuation involves assessing the estimated cash flows, which helps discern the asset’s absolute return potential and compare it to competing assets. This step significantly influences the third step, which is developing a thesis about the asset's expected return and risk by analyzing valuation estimates against current market prices and economic conditions. The market is dynamic; ongoing monitoring ensures that your expectations for the asset remain aligned with your investment objectives.

The final step involves understanding how assets within a portfolio interact. Since portfolios are composed of multiple assets, their combined performance impacts overall investment goals. Formulating a plan to add assets that complement each other and help meet objectives is essential. Integrating these steps into a comprehensive process improves your ability to achieve your investment goals effectively.

Paper For Above instruction

The following paper develops a detailed client analysis for two hypothetical clients, Ezra and Jacob & Rachel, based on their financial circumstances, objectives, and risk tolerances. This analysis guides the formulation of investment strategies tailored to their needs, aligning with core investment principles and ethical considerations surrounding property rights and safety issues related to gun ownership in the workplace.

Client Analysis: Ezra

Ezra, a 26-year-old single individual, demonstrates a high-risk tolerance consistent with his youthful age and existing investment behavior. His statement regarding the need to take on as much risk as possible, combined with his willingness to accept a 30-40% potential loss for higher returns, indicates a growth-oriented investment approach. Ezra’s current assets include $15,000 in a 401(k) invested 100% in stocks and $20,000 in cash savings, including a recent windfall of $60,000. His income of $70,000 annually supports his normal living expenses of approximately $4,800 monthly, leaving him with about $1,000 in savings each month, primarily directed toward retirement and savings accounts.

Ezra's immediate financial objective is to secure about $5,000 for an engagement ring and an additional $10,000–$15,000 for his wedding in the next 12-24 months. Given his age and risk profile, he is inclined toward aggressive investments that maximize growth, accepting substantial short-term fluctuations. His investment behavior and goals classify him as a growth-oriented investor, aiming to build wealth over the long term while managing liquidity needs for upcoming expenses.

Client Analysis: Jacob and Rachel

Jacob and Rachel, aged 53 and 52, respectively, are in the midst of their accumulation phase, preparing for retirement within the next 8 to 13 years. Their combined income of approximately $275,000 before taxes and substantial savings of $900,000 signifies a moderate to moderately aggressive risk profile, with an initial asset allocation of about 70-75% equities. Their key financial objectives include preserving capital, generating income to support a partial retirement, and slowly transitioning to less risky investments as they near their retirement date.

They prioritize safety and stability, noting that they cannot sustain significant portfolio downturns given the limited time to recover. Their preference for income generation—aiming to withdraw 3-5% of their portfolio annually—aligns with a balanced approach that incorporates bonds and dividend-paying stocks. Their willingness to maintain some growth exposure reflects their desire to ensure their assets outpace inflation and support their retirement plans.

Evaluation of Ethical and Property Rights Issues

The debate surrounding firearms in private workplaces raises important ethical questions about property rights versus safety. Legally, the Second Amendment guarantees individuals the right to bear arms; however, this right traditionally pertains to government restrictions, not private property. Workplace policies, as private entities, have the authority to regulate firearms on their premises to ensure safety. Ethically, employers have a duty to safeguard their employees, which can justify restrictions on weapons in the workplace and parking lots, especially considering data indicating workplace violence and the risks associated with firearms in volatile environments.

From a moral perspective, individual rights to self-defense must be balanced against community safety and employers' rights to maintain a secure environment. The potential for guns in office settings to escalate conflicts or contribute to workplace incidents outweighs the perceived convenience or personal security benefits for some employees. Therefore, a policy that restricts weapons on workplace property aligns with ethical commitments to protect all employees from harm while respecting property rights. This balance underscores the complex ethical landscape where individual liberties intersect with collective safety concerns.

Conclusion

In summary, developing an effective investment plan requires understanding the specific characteristics and valuation of assets, aligning with clients’ risk and return objectives, and respecting ethical considerations related to safety and property rights. Ezra’s aggressive growth profile aligns with his youthful risk tolerance, while Jacob and Rachel’s more conservative, income-focused approach reflects their mid-career and nearing retirement timeline. By integrating core investment principles and ethical considerations into tailored strategies, investors can better meet their objectives and uphold moral responsibilities, especially in sensitive areas such as workplace safety and gun rights.

References

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