INVESTMENT CASE - GROUP 8
Case in Chapter 2:
Age: Middle-aged
Marital Status: Traditional family with 3 generations
Occupation: High-level manager of a State Agency
Dependents: 2 high school – children and Elderly and frail parents
Location: Class 1-urban in Vietnam
I. Introduction:
1. Personal/Family Goals:
- Short-term: Create a financial safety net and fund children's education expenses.
- Medium-term: Plan for retirement and support elderly parents' healthcare needs.
- Long-term: Generate wealth for future generations and enjoy a comfortable
lifestyle.
2. “Pay yourself first”:
- Retirement Planning: As a middle-aged individual, it's essential to ensure
your financial security during retirement. By allocating a portion of your
income to retirement savings as the first priority, you are safeguarding your
own future.
- Emergency Fund: Your family setup, with dependent children and elderly
parents, makes having an emergency fund crucial. By paying yourself first, you
can create and maintain an emergency fund that provides a financial safety net
for unexpected expenses.
- Education for Children: With high school children, educational expenses are
significant. By allocating a portion of your income for your children's
education as a priority, you can better plan for their future and ensure their
access to quality education.
- Care for Elderly Parents: Caring for your frail parents is not only a
responsibility but also a financial commitment. Paying yourself first means
ensuring you have the means to provide them with the necessary care and
medical attention.
- Savings and Investments: Beyond immediate expenses and obligations,
allocating a portion of your income for savings and investments can help grow
your wealth over time, allowing you to better support your family's long-term
financial needs.
3. Current Financial Problems:
- Expensive education expenses for high school children.
- Healthcare expenses for elderly parents.
II. Reasons to make selection: (Huyền)
- Education: They have two high school kids, so they need to ensure their
children will get the best education to get a good-income job in the future.
- Real estate investments:
● Real estate investing is safe and secured by the asset itself — the
building.
● Diversify their portfolio.
● Provide a steady income stream and long-term growth potential.
● In the future, they can pass down to their children.
- Healthcare:
● They have elderly and frail parents => their parents may suffer
from different diseases.
● Prepare for emergencies that may happen in the future.
- Cash and emergency fund:
● Prepare for emergencies that may happen in the future (job loss,
repairs for house or cars, tax bill, ...)
- Equity investments:
● Equity funds tend to generate the highest returns among all
kinds of investments.
● Equity funds are cost-efficient because they can be a shareholder
in various companies through small investments without a high
capital requirement.
● Equity funds offer investors to choose between growth and
dividend plans. For those who do not opt for a dividend plan,
their profits are reinvested, while those who seek dividend
income are paid.
- Fixed income securities:
● Provide steady interest income to investors.
● Reduce risk in an investment portfolio
● Protect investors against volatility or fluctuations in the market.
III. Potential Gain/Loss:
- 1 year: Real estate investments may yield rental income, fixed deposits provide
stable returns, stocks and mutual funds may experience moderate gains or losses,
while education and healthcare funds will be utilized.
- 5 years: Real estate investments' value may appreciate, fixed deposits and
stocks/mutual funds can generate significant returns, education and healthcare funds
may be utilized.
- Longer term: Real estate investments can accumulate wealth, fixed deposits can
grow, stocks/mutual funds provide higher returns, and education and healthcare funds
continue to support short-term goals.
IV. Suggestion
1. Portfolio
Long-term investment
Real estate 4.000.000.000 VND
Stocks 400.000.000 VND
VIC 200.000.000 VND
VCB 100.000.000 VND
FPT 100.000.000 VND
Life insurance 1.200.000.000 VND
Short-term investment
Gold accumulation 300.000.000 VND
Mid Cap Stocks 100.000.000 VND
Total 6.000.000.000 VND
2. Allocation
1. Cash and Emergency Fund (10%): Allocate 2 billion VND to a readily accessible
savings account or emergency fund. This provides liquidity for any immediate
financial needs or unforeseen expenses.
2. Fixed Income Securities (30%): Invest 6 billion VND in fixed income securities
such as government bonds or corporate bonds. This allocation provides a stable
income stream and relatively lower risk compared to other investments. Potential
gains over 1 year can be around 5%, while gains over 5 years and longer can range
from 6-8% annually.
3. Real Estate (20%): Invest 4 billion VND in real estate properties. This can be in the
form of residential or commercial properties with potential rental income and capital
appreciation. Real estate investments can provide a steady income stream and long-
term growth potential. However, it's crucial to conduct thorough research and due
diligence before investing to minimize potential risks.
4. Equity Investments (30%): Allocate 6 billion VND to a diversified equity portfolio.
This can include investing in individual stocks, mutual funds, or exchange-traded
funds (ETFs). By investing in a variety of sectors and companies, the portfolio can
achieve capital appreciation and potential dividend income. However, equity
investments come with higher volatility and risks, so it's important to have a long-term
investment horizon of 5 years or more. Potential gains over 1 year can be around 10-
15%, while gains over 5 years and longer can range from 12-15% annually.
5. Education and Health (10%): Allocate 2 billion VND towards education and health
expenses. Set aside this amount to cover any future educational costs for the children
or potential health-related expenses for the elderly parents.
