Question:
Mr. Jones is 45 years old and is in good health. He is married, and has two children aged 17 and 18. He and his wife own all shares in a Limited Liability Company that owns a tavern and adjacent restaurant presently valued, based on future cash flow projections, at $5.9 million.
The property around the tavern and restaurant is rapidly developing. Mr. and Mrs. Jones would like to retire to New Mexico after their children have completed four years of college each (paid in full by their parents). The following is a list of assets:
- $5.9 million current present value of the tavern/restaurant
- One joint and several Roth IRA valued at $279,000
- One residential home valued at $475,000 with 5 years left on the mortgage (balance - $120,000)
- Two college savings plans valued at $91,000 and $84,000
- No stocks owned outside of the IRA
- One six month CD valued at $31,000 - renewable
- Cash on hand - $2,500
Formulate and justify an investment policy statement setting forth the appropriate guidelines within which future investment actions should occur. In the statement please be address all relevant objective and constraint considerations.