74-year-old widower, excellent pension, $500,000, long-term care insurance, no debt, and three children. In no more...

74-year-old widower, excellent pension, $500,000, long-term care insurance, no debt, and three children. In no more than 200 words:

Develop an investment portfolio that meets their needs, specifying the categories of securities or other assets types.

Solutions

Expert Solution

The portfolio is as follows:

1. Out of $5,00,000, $50,000 should be invested in mediclaim as the age of the lady is 74 years. This will be sufficient money to cover her hospital and other medical expenditures. The claim should cover entire family.

2. At the age of 74, it will not be a wise decision to invest in risky assets to generate future yield, therefore, $50,000 should be invested in regular dividend paying stocks, which will generate recurring revenue to meet the routine requirement of family.

3. $1,00,000 should be invested in Government bonds, which pay regular interest and are very safe instruments as it would not be a wise decision to invest in risky assets. This will become a regular source of income for the family to run the house.

4. $2,00,000 should be used to run the family. This will be sufficient along with the regular incomes from the sources stated above.

5. The remaining $50,000 can be invested in annual fixed deposits with banks as at the age of 74, it will not be a wise decision to invest for a very long term. Annual FDs will be a safe source of income for the family.

6. The remaining $50,000 should be invested in SIP or long term mutual funds to generate future revenues.

In this way, the family will earn sufficient revenue to be spent on the expenditure of medical , food, education, electricity, clothing etc. The family will live a descent life and will have a secured future

jeff jeffy answered 1 year ago

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