MCS*2100DE Personal Finance Management
Case study

Jane inherited $30,000 from her grandmother. She plans to invest it for a future down payment on a house. She is currently a young single living in downtown Toronto. She plans to remain in downtown Toronto for the next 3 or 4 years. At that point her plan is to travel for 6 months to 1 year. When she returns to Canada she hopes to obtain a job outside of Toronto area and purchase a home.

She is relatively conservative and would rate her risk level as 4 out of 10 (10 being the highest level). She does not want to lose the $30,000 she received from her grandmother. She is interested in obtaining tax relief on her investment but does not want to spend much time managing her investment-about 1 hour per month. She currently has an adequate emergency fund so she likely will not need to access these funds. She is saving money from her income for her travels.

Now please answer the following questions:

Do you think she should invest in debt or equity securities or both? (2 marks)

Once you have decided your answer to Question 1, pick a specific investment choice or choices that you think would meet her objectives. For example, GIC’s, bonds, blue chip stock, dividend stock, growth stock, money market funds, equity funds, etc. (3 marks)

What criteria have you used to evaluate the investment choice or choices you picked for her in Question 2? (5