Data and Solutions
Work, solutions, visuals, and graphs
Start with $80k, goal is $120k
#1:
!! 40k in 1 year GIC (3 times), 40k In 3 year GIC !!
40K 1 YEAR GIC (3 TIMES) – 3.5%, multiply by 1.035 (add 10k each year)
Year 1: 40000 times 1.035= 41400
41400 + 10000= 51400
Year 1 2nd time: 51400 times 1.035= 53199
53199 + 10000= 63199
Year 1 3rd time: 63199 times 1.035= 65410.97
65410.97 + 10000 = 75410.97
40K 3 YEAR GIC – 4.2%, multiply by 1.042 (no adding 10k each year!)
Year 1: 40000 times 1.042= 41680
Year 2: 41680 times 1.042= 43430.56
Year 3: 43430.56 times 1.042 = 45254.64
Will it reach our goal? (120k)
75410.97 + 45254.64=120665.61
Yes!
#2:
Stock Investments- 3 years, 4 years (add 10k each year)
7.2% increase and –6.9% decrease
1st path, increase each year
1st year with $80k, multiply with 1.072 (7.2% converted)
= $85760, add 10k => 95760
2nd year: 95760 times 1.072
= $ 102654.72, add 10k => 112654.72
3rd year: 112654.72 times 1.072
= $ 120765.86, add 10k => 130765.86
2nd path, one year isn’t successful/increasing
1st year: 80000 times 1.072 = $85760, add 10k => 95760
2nd year: 95760-6607.44= 89152.56 (using 6607.44 since it is 6.9% of 95760) add 10k, 99152.56
3rd year: 99152.56 times 1.072= 106291.54, 106291.54 + 10000 = 116291.54
4th year: 116291.54 times 1.072= 124664.53, 124664.53+10000= 134664.53
is it enough to reach our goal?
Yes. the 2nd path takes 1 more year though since there was a decrease the 2nd year.
Justification
For my first solution, I used two different GIC’s combined. It’s a safe option because there is a lower investment risk, and the rate will stay the same no matter what happens to the market. However, you can’t receive your money until your agreement is finished, and long term investments will not be able to keep up with inflation.
For my second solution, I used stock investments. This option is easier because you can start online, or with a broker. Also you don’t need much to start. If you understand how economies grow, then your investments will most likely be successful. In order to earn well from you investments, you should take time researching the company your planning on investing in, and be aware that you can lose everything, and could go through a lot of emotional distress.
The second option is more suited for me because using a GIC seems boring. I’m heading for something long term, and the first option can’t keep up with inflation, which sadly will keep growing in our economy. I understand that investing in stocks can go terrible but I believe I have a good understanding in our economy and I usually have a hard time starting anything, so hearing that you can start investing in stocks online gave me the decision to choose this option.
Collaboration and Contributions
How did you find working with your group?
I had a good time working with my group because they were easy to communicate with, and they answered my questions and cleared any extra confusion. I’m glad I was able to collaborate well with my group because I’m not familiar with finance, and they taught me simple details that helped me understand how investments work.
How did you contribute to the group? And how did others in the group contribute to your learning?
I contributed by making calculations, listening, asking questions, and making group decisions. The others contributed by listening, giving ideas, answering questions, and making group decisions. Overall, they were great people to work with.
Did you use any other solutions proposed by your group? Why or why not?
No, we only used these two presented above because they achieved the finance goal.
How would you rate your ability to collaborate with others in your group on a scale of 1-4 (1 not good; 4- excellent)
As explained above, I had a good time working with my group, so I would rate my experience a 4.
Core Competency Reflection
I show others that I truly value their contributions by…
listening to their ideas and opinions, and giving them the advice needed. I don’t throw away their ideas but instead, we working together to form it into something that would be a good possible solution. An example of this is when my two partners started off with the idea of splitting our money in half and putting it into two separate GIC’s. Instead of doubting their decision, I agreed with their idea, and we were able to come up with a successful solution.
In discussions and conversations, I help to build and extend understanding by…
asking questions, listening to ideas offered, and making agreements. Asking questions is a key part in growing one’s understanding, and I’m glad that I was able to comfortably clear up the confusion I had at the beginning of this lesson. I also listened to my groupmates ideas, which showed me their perspective on what to do with our money, which made me more open-minded. Finally, me and my group we’re able to agree on multiple ideas, so finding a solution was less-stressful and simpler.
I remain open minded as I explore viable options or alternative approaches, like when I…
when we first received this assignment, I was quite worried. Honestly, I never enjoyed working with finance related work so I expected my time to be stressful and tiring. Surprisingly, I had a good time working on this project. I remained open-minded when working with my group, since I didn’t know much about this topic. This gave me the opportunity to explore different options, and understand why someone wouldn’t choose a riskier choice.