PERSONAL FINANCE

Assignment 9

(Thursday, November 11)

Purpose: Complete development of background information you need to decide upon your family's recommended asset allocation.

To be more specific in this assignment, you will (1) Complete your family's Net Worth worksheet using information from the 2007 Survey of Consumer Finances (for example, Tables 11, 13) and any other sources you find relevant, or have already developed for your prototype (e.g., value of home, size of mortgage, student loans, credit card debt, etc.); and (2) Identify your family’s current Asset Allocation. To develop a realistic portrait of your family's current asset allocation you should use information from the Survey of Consumer Finances (for example, Tables 5 & 6-6.7, 7.1, 9 from the 2007 Survey of Consumer Finances ) and data on the "actual" asset allocation" of our prototypes.

Your work for this assignment will include additions to your Master Spreadsheet, as well as a separate write-up in Word.

Resources: Witte & Gulley Investing I, Investing II, Investing III presentations, Swensen Chapters 1-4, 6, 10 & 11, information from the 2007 Survey of Consumer Finances, data on the "actual" asset allocation" of our prototypes and Betty Febo, including her web page for the course.

Since the Survey of Consumer Finances uses asset classes different from those used in Econ223, we developed a spreadsheet that matches the two classification systems. Click here to download this spreadsheet.

Begin by downloading the Prototype Excel spreadsheet entitled “Net Worth & Asset Allocation Templates for Assn 8” from the First Class conference. This spreadsheet contains two worksheets (Net Worth & Asset Allocation). Copy both worksheets into your Master Spreadsheet, keeping the same worksheet names.

Next complete the Net Worth worksheet for your family. Recall that Net Worth is equal to assets-liabilities (e.g., debt). Information in Tables 11-13 of "2007 Survey of Consumer Finances" provide information on the liabilities of US families. Remember that your family’s liabilities will include remaining outstanding principal balances of loans, mortgages, etc.

The information in rows 56-66 of your “Risk, Goals & Background” worksheet, data in Tables 5-9 from Survey of Consumer Finances & data on the "actual" asset allocation" of our prototypes can help you to develop realistic current asset holding for your family.

After you have entered all assets & liabilities in the Net Worth worksheet, calculate your family’s Net Worth (Assets-Liabilities) using the Net Worth worksheet. In a separate word document for this Assignment #9, briefly discuss your family’s Net Worth.

Next, in the worksheet “Asset Allocation,” fill in column B titled "Asset ($ Holdings)" using links to the "Net Worth" & “Risk, Goals & Background” worksheets where appropriate, additional information from Tables 5-9 from Survey of Consumer Finances and data on the "actual" asset allocation" of our prototypes.

Be sure to also fill in cells B6 to B18 in the Asset Allocation worksheet, under “Factors Impacting Long-term Investing Decisions,” using links to other worksheets, particularly the "Risk, Goals & Background" & “Prototype Summary” worksheets.

Finally, fill in the % allocation calculations in columns C and D.

Upload your write-up and Master Spreadsheet with the information requested above in the Net Worth & Asset Allocation worksheets to the Assignment 9 folder in the Econ223-Drop conference in First Class before class on Thursday, November 11th.

Presentation & Financial Advisor Work

The assignment presentation and advisor suggestions for this assignment will be on November 15.

Home Outline &Readings Description Assignments Requirements

Ann Witte, AWitte@Wellesley.edu
Economics
Date Created: October 22, 2006
Last Modified: November 6, 2010
Expires: January 15, 2011