Calculations:
The house costs $800,000, and we are attempting to save 15% of the purchase price for a down payment. We already have 80,000 saved and hope to have 120,000 at the end of three years. We make enough to add 10,000 each year, which is added to the downpayment.
For this we had 3 options that we could invest in:
A. 1 Year 3.5% annual non-redeemable GIC
B. 3-year 4.2% non-redeemable GIC (4.2% annual return per year)
C. Stock Investments***
I chose to invest in a 3-year GIC and stocks
3-year GIC
Year 1 – 50,000 x 1.042 = 52,100
Year 2 – 52,100 x 1.042 = 54,288.20
Year 3 – 54,288.20 x 1.042 = 56,568.30
Stocks
Year 1 – 30,000 x 1.075 = 32,250
Year 2 – 32,250 x 1.075 = 34,668.75
Year 3 – 34,668.75 x 1.075 = 37,268.91
56,568.30 + 37,268.91 = 93,837.21
93,837.21 is the amount of money created by combining the total of the GIC and Stock. As this was a simulation of 3 years we added 10,000 to our down payment each year. In total, we would have made 123,837.21.
93,837.21 + 30,000 = 123,837.21
1 Year of Stocks Downturn
Year 1 – 30,000 x 1.075 = 32,250
Year 2 – 32,250 x 0.0866 = 2792.85
32,250 – 2792.85 = 29,457.15
Year 3 – 29,457.15 x 1.075 = 31,666.44
(Stocks) 31,666.44 + (3 Year GIC) 56,568.30 + (3 Years 10,000) 30,000 = 118234.74
If there is a 1-year downturn in stocks we will not be able to pay our downpayment in the span of 3 years. We would need 1765.26 more to reach 15% of the house downpayment.
120,000 – 118234.74 = 1765.26
Alternatively, I can also choose to put all my money into a 3-year GIC
80,000 x 1.042 = 83,360
83,360 x 1.042 = 86,861.12
86,861.12 x 1.042 = 90,509.29
We can then add the 30,000 we saved up and get 120,509.29
90,509.29 + 30,000 = 120,509.29
The 3-year option GIC will also be able to accumulate enough for the 15% downpayment. Unlike stocks, GIC is a very safe option when investing your money. It is almost guaranteed and will typically result in no loss.
Justification:
Speculative: 10%
Moderate risk: 30%
Low risk: 40%
Cash and cash equivalents: 20%
I like to avoid risk by investing in low-risk investments. I picked a 3-year GIC and stocks for my solution. I wanted to take some risks while still increasing my balance. GICs are very low-risk investments which suit the pie chart of my risk tolerance. I decided to put the majority of my money in GICs and the remainder in stocks. Stocks, despite having a high-profit margin, also carry a significant risk. I put 30,000 into stocks so that even if I lose some money, it didn’t impact me as much. With the potential for large profits, I planned to invest a few thousand dollars in stocks. While a GIC is guaranteed I cannot deposit or withdraw money within the 3-year span. So if there is a situation where I need money for something, I will not be able to get the funds required. Thus I must save my money and use it resourcefully.
Collaboration Questions:
- How did you find working with your group? – I found it okay working with my group. I felt that I had to step up most of the time and actually finish the questions we had to answer.
- How did you contribute to the group? And how did others in the group contribute to your learning? – I contributed by doing the work and also helping the other members of my group if they needed it.
- Did you use any other solutions proposed by your group? Why or why not? – I did not use any of the other solutions proposed by our group. We only did 1 solution thus I just thought of another solution on my own time.
- How would you rate your ability to collaborate with others in your group on a scale of 1-4 (1 not good; 4- excellent) – I would rate my collaboration abilities a 3/4. My collaboration ability is great but in this situation, our group did not cooperate as much as I wanted and was mostly one individual doing most of the work. If the group all cooperated and collaborated together I would rate my ability 4/4
Core Competency:
When I need to boost my mood or re-focus, I…
When I need to refocus or lift my mood, I either take a quick break or do some exercise. Taking a short break or doing some exercises can help you refocus because they replenish your mind. I then go back to work. Another thing I do to keep myself from being sidetracked is to take my phone away from me while getting rid of any additional distractions. For example, when using a computer, I will close any social media tabs that are open.
When I need to work collaboratively with people I don’t know well, I…When I have to work with people I don’t know well, I tend to be quiet and awkward at first. So, in order to resolve this issue, I will force myself to speak up. If I notice that no one in the group is taking the initiative, I will be the first to act. If the group is unable to work well together at first, we can all begin by introducing each other in order to get all members to talk and feel more comfortable. Everyone will eventually become more comfortable talking to one another, and we will be able to work well as a group.
I know the group is working well together when I hear/ see…
I know the group is working well together when I hear/see that everybody is participating in productive activities and discussing the project. The goal of a group project is to complete the assignment with the assistance of all members. Not just one person doing all of the work. Everyone should work together to help one another while also doing their fair share of the work. Most people will probably lose focus after a long period of work, so we can take a quick break or I will make sure that everyone is completing their given tasks.