Problem:
I have received an inheritance for which I need to make wise investment decisions. I have received a $100,000 inheritance and would like to invest. Since I recognize the importance of diversification, invest the amount in a variety of financial instruments.
1. Decide on a good investment mix; in other words, decide what percentage of the inheritance will be invested in stocks, bonds, and cash. Allocate a specific dollar amount to each type of investment. An example might be: stocks, $60,000; bonds, $30,000; cash, $10,000.
2. Use the Cybrary to research various investments of interest. Go to some of the leading sites that deal with stock, bond, and mutual fund investments.
3. Divide the stock investments in your portfolio between mutual stock funds and common stocks. For each stock or stock fund, find and list: the 52-week highs and lows, the current price, and the Beta value. Stocks are typically purchased in lots 0f 100. Stock mutual funds sometimes require a minimum dollar amount (e.g. $2,500) that may be spent on an initial purchase.
4. Divide the bond investments in your portfolio between treasury, corporate and municipal bonds (or bond funds). List bonds by type, yield, and maturity.
5. Select a money market fund for cash investments. All of the major brokerage houses offer them.
6. Create a table showing all the investments, the number of shares purchased, the purchase price per share, and the total cost. Remember that the sum of all investments must not exceed $100,000. Include a right hand column in the table for an explanation of why you selected the particular investment.