Case Study Of Meriwethers

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The Meriwethers have set two financial goals which entail saving $150,000 for each of their two children, along with $100,000 for retirement. Both of these financial goals, the numbers had to be adjusted for an increase in inflation over the length of time it would take to reach their goals. The estimated inflation rate that was used was 3.0%. This was a conservative number to use as the the average over the next four years is approximately 2.4%, which is under the 3.0% that was used for inflation. The reason 3.0% was chosen was so that if inflation stayed near 2.4%, the Meriwethers would have more money saved for college and retirement. On the flip side, if inflation did rise to the 3.0% the Meriwethers would have the required amount needed…show more content…
The Meriwethers have several options in regards to this final portion of retirement. The first options they have is sell the 36,000 shares today which will result in $1,392,840 value and overrage of $26,404 the Meriwethers can add back into a savings account. One issue that this position has it the tax implications of the shares of AT&T stock. Selling all of the stock at one time will result in a large tax burden for the Meriwethers.
Another method the Meriwethers can implement is to hold onto the AT&T hoping that the value will increase over the next twenty-three years. This risky as it is hard to project the value of a stock of at twenty-three year period and the market can be volatile over that time
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Meriwether, he requested three investment recommendations that would beat their comparative benchmarks and the fits his overall financial goals. Theses recommended investments are a tech money market mutual fund, Series EE government bonds, and municipal bonds. All three of theses contain little to no risk behind him. The first of these recommendations is the Fidelity Select Software & IT Services Portfolio Mutual Fund, which is the highest recommended mutual fund is in competitive area. This mutual fund contains several top tech companies that include: Microsoft Corp, Alphabet Inc. C & A, Facebook Inc., IBM, and more. Compared to the other types of recommended investments, a mutual fund is the most riskiest. However, due to it being the top ranked mutual fund and containing several of the top tech companies, the normal high level of risk is dropped to a lower rate. Of the three recommendations is one that Mr. Meriwether can look at daily if he so chooses because he can take a look at each of the individual companies that compose the mutual
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