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Mutual Fund : Assignment-2 : Forecasting and asset allocation: (POST EXCEL FILES along with your word document)

1. Jack is currently 20 years old and has 1000 dollars in his 401 k. He plans to put in additional 1000 dollars every year. He is not sure about the allocation so decides to put 50 % in a stock fund and 50 % in the bond fund. If the future fund growth performance is same as the historical growth;

1. Forecast how much will Jack have in each fund and calculate his asset allocation percentage based the forecasted amount at the end of each age period.

2. Read rule of 100 (in the text Investment demystified). Compare Jack’s asset allocation of 50/50 (which he is not changing over time) and compare with applying rule of 100. Provide comparison over the periods (Current age, 30, 40, & 50)

3. What would you recommend Jack and why?

1. Jill is currently 30 years old and has 30,000 (ten thousand dollars) in her 401 k. She plans to put in additional 1500 dollars every year. She is not sure about the allocation so decides to put 50 % in a stock fund and 50 % in the bond fund If the future fund growth performance is same as the historical growth;

1. Forecast how much will Jill have in each fund and calculate her asset allocation percentage based on the forecasted amounts at the end of each age period..

2. Read rule of 100 (in the text Investment demystified). Compare Jill’s asset allocation of 50/50 (which he is not changing over time) and compare with applying rule of 100. Provide comparison over the periods (Current age, 40, 50, & 60)

3. What would you recommend Jill and why?