Alisha Hilton / March 2, 2023

Data And Solutions

Plan:

Money Saved: $80,000
Goal: $120,000 (15% of 800,000)

GIC: 3.5%
Stocks: 7.5%
Savings: +$10,000 each year

GIC: $10,000
Stocks: $70,000
Savings: added to the GIC account

Year 1

GIC: (10,000 x 1.035= 10,350) $10,350
Stocks: (70,000 x 1.075 = 75,250) $75,250
Savings: $10,000

TOTAL: $95,600

Year 2

GIC: ((10,350 +10,000) x 1.035= 21,062.25) $21,062.25
Stocks: (75,250 x 1.075 = 80,893.75) $80,893.75
Savings: $10,000

TOTAL: $111,956

Year 3

GIC: ((21,062.25+ 10,000) x 1.035= 32,149.4287= 32,149.43) $32,149.43
Stocks: (80,893.75 x 1.075 = 86,960.7812 = 86,960.78) $86,960.78
Savings: $10,000

TOTAL: $129,110.18

Year 3 If Stocks Decline

GIC: ((21,062.25+ 10,000) x 1.035= 32,149.4287= 32,149.43) $32,149.43
Stocks: (80,893.75 x 0.913 = 73,855.9937=73,855.99) $73,855.99
Savings: $10,000

TOTAL: $116,005.42

Money Income Each Year

	Year 1	Year 2	Year 3
GIC	$350	$712.25	$1087.15
Stocks	$5,250	$5,643.75	$6,067.03
Savings	$10,000 (added to next GIC)	$10,000 (added to next GIC)	$10,000
Total added	$15,600	$16,356	$17,154.18

Total earned: $49,110.18 (+$80,000)

Justification

My solution reached the goal with $19,000 extra. Most of the money was put into Stocks to get the money that was needed and the rest was put into a GIC to be safe. The solution has a high risk. If everything goes well there will be a good amount of money. If the stocks were to go down by one year there would not be enough money. However, the GIC money will help assure that the amount will be nearer to the goal if the stocks go down.

If I had not put the savings money into the GIC and put it all into the stocks, the risk would be higher. If the stocks went down, the amount would be further from the goal. The plus side to that solution would be that if everything worked out there would be more extra money. I don’t think that putting all the money into stocks is the best idea because the risk is higher. More money is good to have, however the goal is to reach a certain amount. Additionally, if the stocks were bad for more than one year you would end up having less money than you started with and it would be harder to earn it back.

There is also the option of putting it all into a GIC a account each year. This solution is very low risk, guarantied, and comes quite close to reaching the goal (119,759.68 ->$240.32 off). I like having as little risk possible, however, this solution does not reach the objective.

–> Y1: 80,000 x 1.035 = 82,800 / Y2: (82,800 + 10,000)x 1.035 = 96,048 / Y3: (96,048+10,000)x 1.035=109,759.68+10,000=119.759.68

Another good choice I considered would have been to allocate more money to the GIC in the beginning and add the savings to the stocks. (lower risk)

In Conclusion my solution has a high risk but there is a possibility of a greater reward. The weakness of this solution is that the risk high. The strength is that I would have extra money to lower the mortgage amount. Although the solution is somewhat high risk for my level of risk tolerance, it could allow me to reach my goal sooner.

Collaborations and contributions

My group was easy to work with even though not everyone spoke out
The group worked together and discussed different ways to reach the goal amount. We all have different but similar solutions. We compared each other’s work and gave suggestions and ideas to improve our answers.

I would rate my ability to collaborate a 3. I contributed my ideas to the present group members, but some people were absent.

Core Competency

I can reflect on my thinking by considering different options and views: When choosing my solution I took these into consideration.

I can understand and share information about a topic of interest in a clear, organized way: When I came up with my solution I shared and explained it to my group.

I can take on roles and responsibilities in a group; I do my share: I did my work and shared my solutions to my group so we could all compare and discuss our different views.

I remain open minded as I explore viable options or alternative approaches: I thought about the different possibilities, and chose an option that would work for me.

Stock gain/loss According to 2017-2019

3 years: 2017: 6.03% / 2018: -11.64% / 2019: 19.13%
Year 1: 70,000×1.0603=74,221
Year2: 74,221x(1-0.1164)->74,221×0.8836=65,581.68
Year3: 65,581.68×1.1913=78,127.46

1.0603x(1-.1164)x1.1913= (1.1161 -1) ->11.61%(Actual 3 year rate of return)
Total 3 year return: (78,127.46/70,000)-1=11.61%
70,000×1.1161=78,127.45