Investing in Shares for a Household

In: Business and Management

Submitted By Ibrahims
Words 3760
Pages 16
Table of Contents

Introduction 3
1. Situation and Risk Profile Analysis 3
1.1 Background 3
1.2 Character 3
1.3 Life style 4
1.4 Time horizon 4
1.5 Objective 4
2. Asset Allocation rationale 5
2.1 Bonds 5
2.2 Equities 5
2.3 Cash 6
2.4 Assets allocation Chart 6
3. Choice of investment Vehicles 6
3.1 ETFs 6
4. Portfolio description 6
4.1 SPDR Dow Jones Industrial Average Trust (Core). 7
4.2 Vanguard Total World Stok ETF (Core) 9
4.3 Vanguard Industrial ETF (Satellite) 10
4.4 Vanguard Energy ETF (Satellite) 11
4.5 iShares iBoxx $ High Yield Corporate bond Fund (Core) 12
Conclusion 13


Making more money or at least preserving one’s wealth are the main reasons for investing. Investing on financial Markets is an option among others with its own set of rules, advantages and setbacks.
In order to to be able to pay school expenses for their three children, Mr. and Ms Brown have decided to invest some money in the stock market.
The purpose of this essay is to demonstrate how Mr. and Ms. Brown proceeded to build their investment portfolio.
In the first part of the essay we will analyze their situation to understand their risk profile, time horizon and objective. In the second part, we will expand on the asset allocation rationale to finally decide in the third part which investment vehicle is appropriate.
1. Situation and Risk Profile Analysis

1.1 Background

Mr. Brown is a forty year old man, happily married with three children; two boys (Isaac and Yassine) and a girl (Rama). The girl is thirteen, Isaac is twelve and the youngest boy Yassine is eight.
Mr. Brown is a middle manager in an international organization with a yearly net salary of USD 120,000. His wife is an executive in a local company where she earns about USD 48,000 yearly. Mr. Brown was comfortable with his salary until he got married to a woman who was…...

Similar Documents


...The Importance of Investing The topic that I will focus on is the importance of investing. To begin investing is the act of laying out money to make a profit in the future. It is important to make your money grow than to let it shrink. There are several ways to invest your money today. Some ways include investing in stocks, bonds, mutual funds, annuities, and treasuries. The importance of investing is an interesting topic because it is essential for everyone to make money. Investing is beneficial in the present and is also extremely beneficial in the future. Investing is also important because investments must be made in order for people to establish a profitable life and future. Furthermore, everyone young and old will be able to benefit from reading this research paper. Since the economy is in such a terrible condition, many people are looking for different ways to invest and increase their incomes. However, I feel like younger and middle age people will benefit the most by learning how to invest earlier in their lifetime. Moreover, the primary data in the research paper will be obtained by a survey taken by young to older adults. I will focus primarily on people that would like to invest their money and also focus on types of ways that interest them about investing. This target market will help define how people will actually benefit from this research project. I will conduct these surveys at work, church, school, and various places around......

Words: 253 - Pages: 2


...and development. We saw several examples from our classmates this week on how culture affected their organizations. My company was obstructed by its owner and the organization’s culture when he decided not to develop and expand a wing on the small private hospital we operate because it had sentimental values to him. One team member found the reading material resourceful and thought it could be used at her organization. The main topic enlightened her was organizational culture and the factors that play a beneficial and liability role in the organization. She noted that “Even though some of the examples exist in my organization, I found it exhilarating to know that management is heading in the right direction by allowing employees to share their views about what happens in the workplace that is definitely beneficial to the organization. Being able to express yourself is important to many individuals within an organization because not only will it help to motivate employees but it also increases productivity which is a key factor in gaining profitability. As for an organization’s liability, this can happen if employees do not want to adhere to new changes in a company such as a new CEO. Often when a new CEO comes on board and begins to make changes to address problems for the betterment of the organization, employees may feel that the changes are not necessary because the organization appears to be doing well. The employees could wonder why change was needed if the......

Words: 700 - Pages: 3

Investing in It Studies of corporate performance reveal a growing link between certain kinds of technology investments and intensifying competitiveness. Investing in the IT That Makes a Competitive Difference by Andrew McAfee and Erik Brynjolfsson Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Investing in the IT That Makes a Competitive Difference 11 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications Reprint R0807J Investing in the IT That Makes a Competitive Difference The Idea in Brief It’s not just you. It really is getting harder to outpace the other guys. Since the mid1990s, competition in the U.S. economy has accelerated to unprecedented levels. The engine behind this hypercompetition: IT. Thanks to powerful tools like ERP and CRM, backed by cheap networks, companies are swiftly replicating business-process innovations throughout their organizations. The firm with the best processes (order fulfillment, field installation, job closing) wins, but not for long. Rivals are striking back with their own IT-based process innovations. To gain—and keep—a competitive edge in this environment, McAfee and Brynjolfsson recommend a three-step strategy: • Deploy a consistent technology platform, rather than stitching together a jumble of legacy systems. • Innovate better ways of......

Words: 7023 - Pages: 29

Saving or Investing

...Saving or Investing How do you decide where to put your money? People are well aware that they need to save money. That being said saving in itself is not really going to help you; you have to do something with the money. That means that you will need to invest your money. A lot of people are afraid to do this but there is really no reason to be afraid if you know what you are doing. What are the differences between saving and investing? Your "savings" are usually put into the safest places or products that allow you access to your money at any time. Examples include savings accounts, checking accounts, and certificates of deposit. When you "invest," you have a greater chance of losing your money than when you "save." But when you invest, you also have the opportunity to earn more money than when you save.  Investing is, well, everything else. Instead of putting your cash in a savings account, when you invest you are generally putting your money into company shares, government or corporate bonds or property – either directly or through a fund. This involves accepting the risk you may get back less than you put in, which is why the rewards – when they do come – are higher. Done well, investing should protect your money against the effects of inflation and give you a stronger return, compounded over time.  Of course investment and saving are not separate things; in order to have money to invest you will need to save it. The important point is that you are better off......

Words: 1148 - Pages: 5


...overall consistent preeminence was simply not possible. But even within the relatively narrow realm that had been the core of Morgan Stanley’s great franchise —providing quality independent financial advice to the leaders of the world’s great corporations—the torch had been passed some time ago to Goldman Sachs. If the emergence during the 1970s of sales and trading and M&A as the profit centers planted the early seeds that changed the culture and structure of the investment banking industry and Morgan Stanley’s place in it, many other internal and external events played critical roles in bringing P r e fac e xi the firm to the state in which it found itself in early 2005. Morgan Stanley’s own decision in 1986 to sell 20 percent of its shares to the public was dramatic both for its rejection of the private partnership tradition that had prevailed for so long and for the fact that the money was being raised to enable Morgan Stanley to participate more aggressively in the leveraged buyout (or LBO) fad then sweeping the industry. During this era, public companies perceived as undermanaged or undervalued became the target of takeover artists who financed these deals by placing previously unheard of amounts of debt. In these deals, Morgan Stanley might not only place this debt, but invest its own money to consummate a transaction. As controversial as it was for Morgan Stanley to sponsor companies with such a heavy debt burden, a more significant line was crossed when the firm......

Words: 114081 - Pages: 457


...The first characteristic of common shares is ownership in the company. Investing in common shares means owning a (very small) piece of a company. Ownership is important as it allows the investor to benefit from growth in the company. Besides, another characteristic is it can participate in Corporate Success. As a common shareholder of a public company, you may directly and indirectly share in the profits of the company. Moreover, dividends and capital gain are also the characteristic of common shares. Dividends that the company declares and pays come from the earnings of the company. If the company does well, you can directly benefit by receiving dividends. Normally, there is no right to a dividend for common shareholders (unlike preferred shareholders). But if the company deems it prudent, excess earnings are often paid out to common shareholders. We will look at dividends a little more later, as they are integral to some investors’ strategies. For capital gains, you may indirectly share in the company’s success by the value of your stock increasing. A change in the share value has many causes. Earnings – current, but more importantly the expected future earnings – is a major determinant of share price. If the earnings outlook appears rosy relative to competitors, other companies, other asset classes, etc., the share price should increase. We will review the factors that impact share valuations later. Besides that, common shares have limited liability. A corporation is......

Words: 998 - Pages: 4

To Share or Not to Share

...To Share or not to Share Peter Todd Shawshank University To Share or not to Share Have you ever taped music off your favorite radio station? That's the old way you would do it if you can't afford the albums. Today people are not only downloading music off the internet but also pictures, movies, games, software and any other kind of computer files that could be beneficial. Each week there are more than one billion downloads of music files alone. Participation in file sharing has also grown. Over 60 million Americans above the age of twelve have downloaded music (Ipsos-Reid, 2002b). File sharing is heavily linked to youth. While a majority of Americans under 18 years old have downloaded and half of those are heavy users, only a fifth of those aged 35-44 have downloaded files (Edison Media Research, 2003). Among U.S. adults at least 18 years old, the number of downloaders has about doubled since 2000 (Pew Internet Project, 2000 and 2003). Because physical distance is largely irrelevant in file sharing, individuals from virtually every country in the world participate. When peers download, they don't all download from one place. Millions of peers around the world are connected and they download files off of each other's computer.  Popular networks are Kazaa, WinMX, Limewire, Morpheus, Frostwire and many more. Downloading files is free, but many people are confused that it would be stealing. The RIAA (Record Industry Association of America) had announced that it is......

Words: 1741 - Pages: 7


...mainstream groups. This process could take decades and generations; all the more reason why it is important for community builders to understand the social organization and leadership structure of the new arrivals and to build on their values and strengths. While some traditional social structures may prevail, others may adapt to those of the mainstream culture. Take a moment and think about the most recent group of newcomers to your community. Who are their leaders? Where do their members go to for help? Think about the group you belong to. Who are the leaders? Whom do you go to for help? How is your group organized to communicate among its members? Obviously there are too many groups in this world to include in this section. We will try to share information about as many groups as we can. While the section may not inform you about the social organization and leadership of groups other than the ones described here, we hope it will help you understand enough about the influence of culture on social organization and leadership to ask the right questions of any group. HOW DO CULTURE AND OTHER FACTORS AFFECT THE SOCIAL ORGANIZATION OF A COMMUNITY? There are many definitions of culture. Culture typically refers to a set of symbols, rituals, values, and beliefs that make one group different from another. Culture is learned and shared with people who live or lived in the same social environment for a long time. Culture is captured in many, many ways -- in the way members of a group......

Words: 5041 - Pages: 21


...Value of Equity and Per Share Value when there are options and warrants outstanding Aswath Damodaran 1 Equity Value and Per Share Value: A Test l Assume that you have done an equity valuation of Microsoft. The total value for equity is estimated to be $ 170 billion and there are 1204 million shares outstanding. What is the value per share? 2 An added fact l On September 30, 1997, Microsoft had 258 million options outstanding, granted to employees over time. These options had an average exercise price of $ 42 (the current stock price i $ 140). Estimate the value per share. 3 Equity Value and Per Share Value l l The conventional way of getting from equity value to per share value is to divide the equity value by the number of shares outstanding. This approach assumes, however, that common stock is the only equity claim on the firm. In many firms, there are other equity claims as well including: – warrants, that are publicly traded – management and employee options, that have been granted, but do not trade – conversion options in convertible bonds – contingent value rights, that are also publicly traded. l The value of these non-stock equity claims has to be subtracted from the value of equity before dividing by the number of shares outstanding. 4 Warrants l l l A warrant is a security issued by a company that provides the holder with the right to buy a share of stock in the company at a fixed price during the life of......

Words: 1339 - Pages: 6

Investing in Ford

...Investing in Ford MGT/521 August 18, 2011 Abstract Choosing the right company to invest, where our money is not only safe, but also multiplies, is one of the toughest challenges for an investor. The potential benefits should outweigh the risks involved. The following is an attempt to put the pros and cons in perspective on why “Ford” is a good choice for a discerning investor. Investing in Ford Ford is an American multinational auto company head quartered in Dearborn, Michigan, that was founded in 1903. Fortune favors the brave. Fortune 500 has placed Ford in the tenth position in the list of the largest American corporations (CNN Money, 2011). A net income of $383 million was reported in the second quarter of 2011, with a pre-tax income of $604 million. (Ford Media, July). But the numbers themselves do not mean much unless there is a comparison with the size of the company. To understand the progress made by Ford, we need to examine the stock price – Today, Ford closed at $11.11 (Yahoo! Finance, August). This figure may not look competitive, when seen in isolation. But when compared to how things were four years back, the progress in phenomenal. In 2008, the shares were as low as $1.01. When placed in this perspective, this is a giant leap for this automobile empire. These statistics show that there has been significant revamping done. In 2010, the company posted its highest net income in more than ten years, the full year net income being $6.6 billion, or......

Words: 1549 - Pages: 7

Investing Smart

...In the United States, a society plagued by capitalism, investing has become a way of life. To most Americans it begins with opening a savings account and slowly allowing that money to grow through the compounded interest rate over the years. While it may not seem like a big step in generating more income, nonetheless, this is a positive movement in the market of investments. With the many types of investments available knowing which are reliable, or safe, or yield good returns, are just some of the questions on the investors mind. Within each asset class there are investments to suit different kinds of risk, duration, returns and liquidity. Bank savings account, as stated before, is the simplest kind of short-term investment. The returns on savings account are low when compared to other investments, but the returns are guaranteed by the supplier, in this case the bank. Banks offer security meaning if a bank was to go broke the federal government through the FDIC (Federal Deposit Insurance Corporation) insures your bank deposits of up to $100,000. Having guaranteed returns means an investment will not lose its value in the short term unlike other investments. The bank pays interest to you account for saving your money with them. Bank fixed term investment also known as certificate of deposit is when you deposit a sum amount of money for a set period usually three, six or twelve months. The money becomes locked away for the fixed term but, in return, you get a higher......

Words: 1498 - Pages: 6

Sterling Household

...For the exclusive use of W. Jingcheng, 2015. 9-913-556 APRIL 30, 2013 WILLIAM E. FRUHAN CRAIG STEPHENSON Sterling Household Products Company January of 2013 brought a new year and an important new opportunity to the management team of Sterling Household Products Company. Sterling manufactured and marketed a wide line of consumer goods, including laundry products, soaps, cosmetics, toilet preparations, and cleaning, disinfecting and sanitizing products, which were sold domestically and internationally, and were used every day in millions of households around the world. Sterling’s family of quality products included many highly regarded brand names, and the company had consistently delivered impressive sales and profits to the investment community. Sterling’s financial measures for all recent years showed that the company was successful, but a time series analysis of these same financial measures quickly isolated Sterling’s current challenge: growth rates for unit volume, sales, and profits were very low, and company management was looking to expand into businesses and products with more potential for growth. Sterling had identified health care as an industry with more growth potential, and a detailed search for health care products which could fit well into the company’s existing operations led to discussions between Sterling and Montagne Medical Instruments Company. Sterling was interested in acquiring Montagne Medical’s germicidal, sanitation, and......

Words: 4626 - Pages: 19

Investing in Pepsico

...Buying a stock or share in a company can seem like an easy way to earn money, but in actual fact there are many considerations to follow when deciding whether to invest and which company is best to invest in. After purchasing a stock of a company, you are not just purchasing a piece of paper, but you are becoming an owner of the company that the stock represents. Pepsico is a billion-dollar company that yields a lot of return on their stocks, and is definitely a great company to choose for an investment. Throughout this paper, you will get to know the necessary information required to make a thorough decision to invest in Pepsico. First of all, a good thing to know about deciding to invest is to get to know the company, since you will soon become a co-owner. Pepsico is a multi-national company, that operates across the entire globe. Pepsico not only offers carbonated soft drinks, but also many other global brands such as; Lays potato chips, Gatorade sports drinks, Quaker Oats, Tropicana, and many more for a total of twenty-two well known brands across the world. Pepsico is part of an oligopoly market, which means it’s “an industry that contains two or more firms, at least one of which produces a significant portion of the industry’s total output” (Ragan, 2013). Company’s that are in an oligopoly competition market can use either high-price or low-price strategy to maximize their revenue and profits. Because Pepsico is in an oligopoly market, their products are substitutes......

Words: 489 - Pages: 2


...Record: 1 Title: Investing is like dieting Authors: Trish Crawford Toronto Source: Toronto Star (Canada), 10/09/2010; ISSN: 0319-0781 Accession Number: 6FP2287240844 Persistent link to this record (Permalink): Cut and Paste: <A href="">Investing is like dieting</A> Database: Newspaper Source Plus Investing is like dieting Financial expert and author gives women the tools to help them save and invest their money Section: Zoned Living, pg. L15 If you've ever been on a diet, then you know how to save money, says author Susan Hirshman. The former investment manager with global financial management firm J.P. Morgan in New York, has written a book Does this Make My Assets Look Fat? (St. Martin's Press) geared toward women. Using the analogy of going on a diet, the CPA divides investments into four basic "food groups,"stocks, cash, bonds and alternative investments. Diet tricks, from counting calories to having a buddy, can be easily transferred to money management, she says. Her motto is, "A man is not a financial plan; the only person responsible for you is you." Do women lack money management skills? It's not just a problem with women but both women and men. The issue is, where are we supposed to learn this? No one teaches us this in school. What happens when we don't have this knowledge? We fall into four types. The Princess is the person......

Words: 856 - Pages: 4

Household Industry

...expenses, curbing margin declines for home- and personal-care peers. Higher pricing, if linked to innovation while ensuring affordability in low and mid tiers, is vital for cushioning volume and gaining market share, especially as currency depreciation and inflation persist in slowing developing markets, like Russia and Brazil. Unilever's 4Q emerging-market volume fell to 2% vs. 3% in the first nine months. (Corrects timeframe.) Peer Comparison: Unilever has the most emerging-market sales exposure among BI personal- and home-care peers, with 58% of group sales in these areas. Colgate has more than 50% of sales in these countries. L'Oreal, Procter & Gamble and Kimberly-Clark have more than 30% of sales in developing and emerging markets. Home and personal care companies will have to ensure they get pricing right for each product and channel, while continuing to invest in innovation to differentiate their offerings to attract demand. This is key to gaining market share amid persistent currency volatility and low global growth this year, as emerging markets slow led by China, and Brazil's recession. U.S. companies may have less resources to achieve this vs. euro-reporting peers as a strong dollar has dragged their sales in 2015. Peer Comparison: The BI global household peers' average currency effect worsened in 2015, to a 3.9% negative impact in 3Q vs. minus 2.1% in 2Q. Colgate had the worst (minus 13%). Kimberly-Clark (minus 12%), Coty and P&G (each minus 9%) followed.......

Words: 409 - Pages: 2