Question

1. Your client is 64 years old. He tells you that his portfolio is currently 100% stock and he plans on keeping it that way for his entire life. Explain to your client the problems with his approach, describe a better solution, and explain to your client why your solution is better.

2. Mr. Kent is 62 and just received a letter in the mail from the Social Security Administration stating that he is now eligible to receive his benefits. Discuss the benefits and drawbacks of claiming Social Security benefits at age 62.

3.Mrs. Lane just lost her husband. They were both retired at the time. Mrs. Lane never held a full-time job. She would like you to explain what will happen to her Social Security benefit now. The total benefit for the Lanes was $3,000 per month ($2,000 for Mr. Lane, $1,000 for Mrs. Lane) before Mr. Lane passed.

4.Discuss the basic premise of a reverse mortgage, and describe how you might address a client’s concerns about using such a product.

5. Your client is nervous. She wonders why you are taking so much risk with her money by having 20% allocated to equities when she is already retired. Explain to your client why you are taking this risk.

Answer 1

Answer 1: As we know that stock is a risky asset which fluctuates a lot with lot of ups and downs. To get good returns and create wealth we need to give time in the Market.

As the Client is 64 years old and high chances that his investments are only his source of income. The problem with keeping all the investments in stock is if he needs urgent money and the stock market is down, he will have to take out the money in loss.

To avoid this issue he needs to keep some money in fixed assets like Bonds, term deposits, Gold, Debt funds and some in stocks so that in times of urgent requirements he could use the money in fixed assets and could wait out for the market to correct and give good returns.

He could use the 100 - age thumb rule of investing which says that 100 - age is the amount that should be invested in stocks and rest to be invested in debt funds which are very less risky and stable in giving their returns. So in times of need or regular with drawings you could use the returns from debt funds and could wait out longer for stocks returns.

In case of unrelated questions we are allowed to answer the first question only please put the other questions separately to get answered.