Comparison of Various Personal Retirement Investments EGR 403-01 Summer 2005 Group #8 Members: Jon Kai-Tsun Chan Steven Doyle Simon Margolis Thomas Nance.

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Presentation transcript:

Comparison of Various Personal Retirement Investments EGR Summer 2005 Group #8 Members: Jon Kai-Tsun Chan Steven Doyle Simon Margolis Thomas Nance Tal Bezalel Nehmad

Purpose Research Various Investment Options For Retirement How Do They Compare To Each Other? Which Yields Most Money For Retirement? Is It Worth The Risk?

Sample Investor Background Age : 25 Years Projected Retirement Age : 70 Years Life Expectancy : 90 Years College Graduate, Starts Work At Age 22, Starts Saving For Retirement At Age 25 Starting Salary : $55k/year With $1000 Increase Each Year To Retirement Savings For Retirement : 10% Of Salary Per Year Investor Is Married; Accounted For When Filing Taxes

Assumptions General Average Inflation Rate : 3% No Massive Inflation/Depression Eras No Situations Requiring Taking Money Out Of Retirement Fund(s) Stable Job(s)

Investment Options IRA Fund - Roth vs. Traditional Company 401(k) - Personal Contribution Only vs. Company Matching & CD Purchase Mutual Funds - Domestic vs. International - Domestic vs. InternationalAnnutities - Fixed vs. Variable IRA, 401(k), Mutual Funds & Stock Market At Various Levels - Risk vs. Reward

IRA Account Roth vs. Traditional Comparing Earning Power For Each Under Equal Circumstances: - Assume Contributions Are Same For Both IRAs - Taking Into Account Taxes - Not Including Early Withdrawal Penalties For Traditional - Balance Of Saved Salary Will Be Saved In Credit Union At 2% Interest Factors For Consideration: - Traditional Contributions Are Done Pretax & Taxed Upon Withdrawal - Roth Contributions Are After Tax Without Tax Upon Withdrawal - Maximum Yearly Contribution, Raised Upon Age 50 - Age Requirements - Additional Circumstances Set Forth By Investor & Assumptions

401(k) Comparison Of Two 401(k) Options: - All 10% To 401(k) - Half Of 10% To 401(k) With 50% Company Match - Other Half To CD With 4% Rate; Compounded Monthly Rate Of Return – 5%

Annuities Fixed vs. Variable Comparison Of Earning Power Based On: - Fixed Requires $10k minimum & 5+ Years Time - Variable Requires 10+ Years - Interest Rate - Contribution Amount - Risk Levels - Tax Deferral - Periodic Payment Option & For How Long - Age Requirements

Mutual Funds Domestic vs. International Comparison Based On: - Contribution Amount With No Maximum - Domestic Management For International Funds - Potential Currency Fluctuations & Economic Status For International Funds

Diverse Portfolio IRA, 401(k), Mutual Funds & Stock Market At Various Levels Professionally Managed vs. Employee- Managed Profit vs. Risk It Is Your Money & Your Responsibility

Resources Vanguard IRAs : Roth vs. Traditional Vanguard IRAs : Roth vs. Traditional Fidelity IRA Accounts Fidelity IRA Accounts Bloomberg 401(k) Calculator Bloomberg 401(k) Calculator CD Calculator CD Calculator Fidelity Mutual Funds Fidelity Mutual Funds The Vanguard Group The Vanguard Group Primerica Financial Services Primerica Financial Services IRS Income Tax Tables IRS Income Tax Tables Fidelity