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

Introduction

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…...

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