Your nephew just graduated from college and he is asking for investment advice. Your nephew is 25 years old and he is planning to retire in 40 years. Your nephew’s employer is offering 401K. Your nephew also heard about IRA and Roth IRA.
Discussion Questions:
Your nephew wants to know whether he should invest in a 401K, IRA or Roth IRA.
Define an asset allocation
Explain how would you advise your nephew to allocate his funds
Explain and defend those factors that you considered in advising your nephew how to allocate his money
Assume that your nephew has already accumulated more than $1 million in his retirement saving accounts and has just five years to retirement.
How would you advise your nephew to allocate his money?
Which investment constraints did you consider in advising your nephew to allocate his money? Explain.
Which investment objective(s) should your nephew pursue (capital appreciation, capital preservation)?