Solved by verified expert:You may often wonder how to retire comfortably. The most common way is to contribute every month to a retirement account during your working years.In a typical retirement plan or a savings plan, it is assumed that there will be equal payments each month and that any interest earned by the plan each month will be added back into the principal. In this way, the plan builds value based upon successive contributions and calculated interest.In most retirement plans, your money is distributed across different types of investments—this is known as your portfolio. In this assignment, you will manage an imaginary portfolio and determine the optimum contributions you must make to each category in your portfolio to achieve your retirement goals.In this assignment, you will use a simple version of a portfolio where your money is distributed across three categories: stocks, bonds, and cash. Refer to this module’s readings to review historical return values.CategoryAverage Annual ReturnStocks6.0%Bonds2.1%Cash1.0%Your portfolio will be diversified across these three different types of investments. The amount that you decide to put into each will greatly depend upon what stage of life you are in. If you are young and just starting out in your career, you may want to have a high-risk portfolio with the hope of high returns in the distant future. However, if you are near the end of your career, you may want to choose a less risky portfolio.Create your own portfolio that addresses the following:After retirement, how much will you like to have annually in order to maintain the standard of living that you expect to have?How much annually do you plan to set aside for your retirement plan?How much of this annual contribution will you want to invest in each of the investment categories?How many years will you work from now until you retire?Click here to download the retirement Excel spreadsheet you will need for this assignment.Put the values that you decided on above into the retirement spreadsheet.Respond to the following in a 3–4-page Microsoft Word document:What is your retirement goal? Can you realistically reach the goal that you have set? How long will it take to achieve this retirement goal?How much money will you need to save in order to achieve your retirement goal?This assignment assumes that the interest rates will remain constant for the entire life of the retirement plan. Is this a realistic situation?Are you planning to have a high-risk or a low-risk portfolio? Explain.What other factors related to contributing to the typical retirement plan must you consider when managing your portfolio?What impact will inflation have on your calculations?
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