Data and Solutions

All-in cost: $800,000
Down-payment: 15% of All-in-cost -> $800,000 x 0.15 = $120,000
Current allocation: $80,000
Consistent yearly allocation: $10,000

Plan A:
$80,000 into a 3 year GIC, with 4.2% interest.
Year 1: $80,000 x 1.042 = $83,360
Year 2: $83,360 x 1.042 = $86,861.12
Year 3: $86,861.12 x 1.042 = $90,509.3
Invest the incoming $10,000 into a 1 year GIC, with 3.5% interest.
Year 1: $10,000 x 1.035 = $10,350
Year 2: ($10,350 + $10,000) x 1.035 = $21,062.25

Final Year: $90,509.3 + $21,062.25 + $10,000 = $121,571.55

Plan B:
$72,500 into a 3 year GIC, with 4.2% interest
Year 1: $72,500 x 1.042 = $75,545
Year 2: $75,545 x 1.042 = $78,717.9
Year 3: $78,717.9 x 1.042 = $82,024
$7500 into stocks, with no downturn, and 7.5%
Year 1: $7,500 x 1.075 = $8,062.5
Year 2: $8,062.5 x 1.075 = $8,667.19
Year 3: $8.667.2 x 1.075 = $9,317.23
Savings over 3 years: 3 x $10,000 = $30,000
Final Total: $82,024 + $9,317.23 + $30,000 =  $121,341.23

Plan C:

$72,500 into a 3 year GIC, with 4.2% interest
Year 1: $72,500 x 1.042 = $75,545
Year 2: $75,545 x 1.042 = $78,717.9
Year 3: $78,717.9 x 1.042 = $82,024
$7500 into stocks, with downturn; 7.5% and -6.9%
Year 1: $7,500 x 0.93 = $6,975
Year 2: $6,975 x 1.075 = $7,498.13
Year 3: $7498.12 x 1.075 = $8060.49
Savings over 3 years: 3 x $10,000 = $30,000
Final Total: $82,024 + $8060.49 + $30,000 =   $120,084.49

Justification

All three of the methods plans listed above ensure that you will have the satisfactory amount of money in order to make a 15% down payment. Even in the case of the stock market crashing, you will have more than enough money. This is extremely risky, and our group did not originally plan on considering it. I like to take calculated risks at times when there is nothing of massive financial concern, such as the case of Plan C. The scenarios explained have great returns, however, in the case of a potential emergency, the large amount of money invested in the GICs may not be withdrawn without the face of a large penalty, which could prove a major disadvantage in many cases. Also, the returns on the stock may not be as high as expected.

Collaboration and Communication

While performing various calculations and making collective decisions as a group, I was able to give interesting ideas and suggestions to my peers, while being an active listener, which involves enhancing your own thoughts based on the contributions of others. I listened to their ideas, and participated a fair amount in the process. I would award myself a 3.75/4 for my efforts, as I did not always agree with the slightly ‘conservative’ nature of my group members.

Core Competency Reflection

I can work with others to achieve a goal. In order to find the most effective way to attain a minimum of $40,000 over 3 years, we divided the tasks which needed to be completed among the group. By doing this, we established the jobs which each person need to complete, in order for our group to achieve our goal.

I can analyze evidence to make judgements. This assignment required quite a bit of ‘trial and error’, which meant going through the interesting process of trying various ideas, or in this case, scenarios. An example of this is that I predicted that simply using a 1 year GIC or 3 year GIC on their own would not be enough. This led us to experimenting with stocks, which was something we had originally not thought of doing.

I can tell the difference between facts and opinions. One thing which my group members were taking into account was the sheer risk of investing in stocks. This seemed like both a fact and opinion. In our case, we would be considering a scenario in which there would either be no crashing, or only one year of the stock crashing. In this way, it became evident that stocks would actually fetch us more money than we originally had, not making it risky.

I can take on roles and responsibilities in a group; I do my share. When we were deciding who in our group would do what task, I actively took initiative to complete my job in the most efficient way possible. When other group members where struggling to grasp their task, I was able to provide assistance as well.