Essay on Financial Goals Of The United States

Essay on Financial Goals Of The United States

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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 for their goals.
For their first financial goal, the Meriwethers need $150,000 for each child adjusted for inflation. The aged of their children are 10 and 5, which start college in 8 and 13 years respectively. For the oldest child, the amount needed adjusted for inflation is $190,016, while the younger child needs $220,280. Child A will have their college funded with the the Certificate of Deposit or CD, that the Meriwether 's possess with a value of $200,000 maturing in one month. This CD will be invested in three steps, broken down into a five year, two year, a one year CD each being compounded annually. At the end of each maturing period, the Meriwethers will reinvest the base $200,000 of the CD, and any interest that is created will be transferred to a secondary CD that will be used for the younger child 's education.
For the Meriwethers to cover the cost of education for their youngest child, the well sell 4,000 shares of their AT&T stock for a value of $154,760 and open a second CD...


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... 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 fund.
The second type of recommended investment are Series EE government bonds. For starters they are a very low risk type of bond because they are held by the government and it is only under extreme circumstances that the government would default. Though the current rates for Series EE bonds is low, at .10% the US Treasury guarantees that if the amount you invest is held to value at maturity it will double in that time frame which is twenty years. This is both a safe and positive investment for the Meriwethers.

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