Question

Your client is a single individual, age 25 who has recently finished college and started a new job. This job pays $50,000 per year before deductions and provides medical insurance and a 401k Plan that the company matches up to 3%. This individual does not have any current savings or investments. Debt includes student loans and a $500 amount on a credit card. This person is planning to continue living with their parents for the next year or two to save some money. Current goals include saving to purchase a vehicle and to either rent an apartment or buy a house within two years and to pay off the credit card balance. The client's risk tolerance level is estimated to be moderate to moderate/aggressive. A budget was created and has been determined that while living at home this individual will have approximately $20,000 per year to put into a financial plan.

give recommendations on what they should do based on the following:

*Where should they spend/invest based on their situation (not specific investments but categories such as a type of account (401k, IRA, savings account, etc.) or investment category (stock, bond, mutual fund, etc.)

*Make sure to base things on the risk tolerance level and time horizon of when they plan to need the money.

*Make recommendations based on debt repayment if that’s part of the case such as credit cards, etc.

*Make any other general personal finance recommendations as you see fit based on the info in the case.

Answer 1

Given the agee of Individual which is 25 years he is having high risk tolerance so he should invest in Stock which is high risk category. He is also not having any near period fund requirement apart from Student Loan & Card Outstanding. So he should pay these due and invest remaing in Stocks.

Further, he is already having 401K Plan then there is no need to invest in the same.

Further considering his age and high risk tolerance Debt and mutual fund is also not recommended.