Problem 1.
Several changes have affected their financial planning. The value of their home has increased due to inflation and home improvements. They have purchased a used car to meet additional transportation needs. These situations must be considered in relation to insurance needs for the Brock household.
What types of health insurance coverage would be recommended for the Brocks?
Problem 2
With three dependent children, the Brocks are assessing their life insurance. Pam has $5,000 of coverage. Josh has life insurance coverage equal to approximately eight times his annual salary.
With approximately 20 years to retirement, Pam and Josh Brock want to establish a more aggressive investment program to accumulate funds for their long-term financial needs. Josh does have a retirement program at work. This money, about $110,000, is invested in various conservative mutual funds.
In addition, the Brocks established their own investment program about four years ago, and today they have about $36,000 invested in conservative stocks and mutual funds. In addition to their investment program, the Brocks have accumulated $11,000 to help pay for the children's college educations. Also, they have $5,000 tucked away in a savings account that serves as the family's emergency fund. Finally, both will qualify for Social Security when they reach retirement age.
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Life Situation
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Financial Data
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Pam, 43
Josh, 45
3 Children, ages 16, 14 and 11
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Monthly income
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$4,900
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Living expenses
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$4,450
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Assets
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$262,700
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Liabilities
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$84,600
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Emergency Fund
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$5,000
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What changes would you recommend for the Brock's life insurance coverage?
Problem 3
As previously noted, the Brocks have some of their investment portfolio in conservative stocks. These equities have had very slow growth while regularly paying a small dividend.
Pam and Josh have received several emails recently with suggestions about various biotechnology, retailing, and environmental companies. The investment advisers believe that these industries would provide an opportunity for strong long-term financial gains.
In recent years, the Brocks have made extensive use of mutual funds in their investment portfolio. However, they are concerned that their selection of the funds may not be coordinated. With over 9,200 different mutual funds available, this financial marketplace is confusing.
The Brocks start the evaluation process by connecting various types of mutual funds to their investments goals. Next, they assess the past performance and management of the funds. Finally, they talk with various financial advisers and other investors to gather additional information.
What types of mutual funds might be considered by the Brocks for their investment portfolio?
Problem 4
With two children in college, the Brocks once again find their life situation changing. Compared to five years ago, their total assets have declined due to college expenses. The Brocks' oldest child will graduate next year, but the youngest will enter college in a couple of years. The drain on the family's finances will continue.
While the family's finances are adequate, both Pam and Josh are beginning to think more about retirement. Over the years, Josh has taken advantage of different career opportunities. Today his annual salary is higher than ever. However, his employment changes have resulted in a smaller pension fund than would have been available had he remained with the same organization.
The current value of his pension plan is just over $115,000. The investment program Pam and he started almost 10 years ago is growing and is now worth about $62,000. But they still worry whether they will have enough money to finance their retirement when Josh retires in 15 years.
Pam and Josh should also be concerned with various estate planning actions. They have talked about a will and investigated the benefits of several types of trusts. However, they have not taken any specific actions.
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Life Situation
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Financial Data
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Pam, 48
Josh, 50
3 Children, ages 21, 19 and 16
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Monthly income
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$6,700
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Living expenses
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$5,600
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Assets
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$242,500
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Liabilities
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$69,100
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What types of estate planning activities and decisions that might be considered by the Brocks at this time?