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The scenario goes like this: 18 years ago, my guardian angel set up a college savings plan for me with an initial investment of $8,500. My angel contributed $50 each month to the college savings plan ($600 yearly). After 18 years at an average annual interest rate of 7%, compounded annually, the plan is now worth a hefty lump sum. Yesterday, I cashed out your plan and deposited the money in a brokerage account to invest on my own.
After those 18 years in the bank, that $8,500 is now $49,128.87. In order to get the most out of this money, I am investing in three different companies. My investment philosophy is that I want to make money, but I don't want to invest in things that I dont potentially agree with. I will give some leeway for something that I know would make me a lot of money but it goes against my morals a little bit. I will draw the line when it comes to a company that goes completely opposite from my morals. I have a pretty high risk tolerance. After taking a quiz online with the Rutgers New Jersey Agricultural Experiment Station, I scored a 37 which means I have a high risk tolerance. I like to take risks and that shows in my investments.
While doing this I had to think a lot about my values and which type of companies follow them. I value environmentally friendly, animal friendly, and profit driven companies. I want companies that look out for animals and the environment but I also want to make money. I would love a company that did all three but if a company that could make me a lot of money was animal friendly but not incredibly environmentally friendly, I would sacrifice that so that I would be able to reach my SMART goals in the time I want to achieve them.
I set some SMART goals for myself to achieve within 25 years. I chose 3 goals I would like to achieve; one after 1 year, one after 5 years, and one after 25 years. My goals are as follows:
When it comes to investing, I chose three companies: Apple, Nike, and Disney. I chose to dive deeper into two of my three companies: Apple and Disney.
Disney is a huge company that has been around for years. They focus on many different elements such as clothing, toys, and most importantly: movies. They have created hundreds of movies over the time of their existence and have also created thousands of shorts. Diversification is very big at Disney. After getting a lot of heat about all of their movies being about white people, they switched it up and started making their movies about all different races, most recently they are releasing a new Disney Princess movie called Moana. They also recently bought the star wars franchise and are releasing 6 new movies under that, 1 of which has already come out and gotten rave reviews. Their economic moat is very large because of the companies that they work with. Their P.E. ratio is 23.32 (industry) and their dividend yield is 1.53%. This companys makes a lot of family friendly movies and they are a very family oriented company, with all of their new movies coming out, they are a very smart investment. Disney is definitely a long term investment.
The scenario goes like this: 18 years ago, my guardian angel set up a college savings plan for me with an initial investment of $8,500. My angel contributed $50 each month to the college savings plan ($600 yearly). After 18 years at an average annual interest rate of 7%, compounded annually, the plan is now worth a hefty lump sum. Yesterday, I cashed out your plan and deposited the money in a brokerage account to invest on my own.
After those 18 years in the bank, that $8,500 is now $49,128.87. In order to get the most out of this money, I am investing in three different companies. My investment philosophy is that I want to make money, but I don't want to invest in things that I dont potentially agree with. I will give some leeway for something that I know would make me a lot of money but it goes against my morals a little bit. I will draw the line when it comes to a company that goes completely opposite from my morals. I have a pretty high risk tolerance. After taking a quiz online with the Rutgers New Jersey Agricultural Experiment Station, I scored a 37 which means I have a high risk tolerance. I like to take risks and that shows in my investments.
While doing this I had to think a lot about my values and which type of companies follow them. I value environmentally friendly, animal friendly, and profit driven companies. I want companies that look out for animals and the environment but I also want to make money. I would love a company that did all three but if a company that could make me a lot of money was animal friendly but not incredibly environmentally friendly, I would sacrifice that so that I would be able to reach my SMART goals in the time I want to achieve them.
I set some SMART goals for myself to achieve within 25 years. I chose 3 goals I would like to achieve; one after 1 year, one after 5 years, and one after 25 years. My goals are as follows:
1-year goal: Have enough money to take a summer off to travel- $7,000
5-year goal: rent a nice apartment in california- $8,000
25-year goal: own a lake house in Wisconsin/ Michigan -$34,000
When it comes to investing, I chose three companies: Apple, Nike, and Disney. I chose to dive deeper into two of my three companies: Apple and Disney.
Disney is a huge company that has been around for years. They focus on many different elements such as clothing, toys, and most importantly: movies. They have created hundreds of movies over the time of their existence and have also created thousands of shorts. Diversification is very big at Disney. After getting a lot of heat about all of their movies being about white people, they switched it up and started making their movies about all different races, most recently they are releasing a new Disney Princess movie called Moana. They also recently bought the star wars franchise and are releasing 6 new movies under that, 1 of which has already come out and gotten rave reviews. Their economic moat is very large because of the companies that they work with. Their P.E. ratio is 23.32 (industry) and their dividend yield is 1.53%. This companys makes a lot of family friendly movies and they are a very family oriented company, with all of their new movies coming out, they are a very smart investment. Disney is definitely a long term investment.
Apple is a gigantic corporation that has been around since 1976. They specialize in electronics: phones, computers, tv systems, headphones, etc. They have released lots of different types of phones over the years and just recently released the iphone 7 and the iphone 7+. These have caused the market to change drastically. Every Time they release a new product their are lines of people ready to get their products. Apple’s economic moat is very strong since lots of people won't try to do the exact same thing as apple because it wouldn't be beneficially if it's not the real thing. Apple's risk factor is most likely very high since they are always changing new things on the iPhones that people may or may not like. Their P.E. ratio is 26.08. This would also be a very smart investment for me to make.
The time horizon comes into play when investing no matter what. I am spreading out my stock investments based on how they have been doing for the past year. If one of my stocks is dropping, I will only invest in that one for 1 year, and if a company is doing well, I will invest in it during one of my longer periods.
I created 3 investment portfolios for each goal I set for myself.
For my 1 year goal, I put in $7,000:
60 shares of NIK @ $51.80 ($3,108 total) (35% of portfolio)
30 shares of APPL @ 114.97 (3,449.10 total) (65% of portfolio)
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| 1 year. MF, 2016 |
The grouping of NIK and APPL had an expected ROI of 21.08%. In the graph above I have sectioned off a pie chart to show how my portfolio was divided.
For my 5 year goal, I put in $8,000:
50 shares of NIK @ 51.80 (2,590 total) (30% of portfolio)
50 shares of DIS @ $93.83 ( 4,691.5 total) (70% of portfolio
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| 5 year. MF, 2016 |
The grouping of NIK and DIS had an expected ROI of 106.8%. In the graph above I have sectioned off a pie chart to show how my portfolio was divided.
For my 25 year goal, I put in $34,000:
40 shares of DIS @ 93.83 (3,753.2 total) (50% of portfolio)
70 shares of APPL @ 114.97 (8,622.75 total) (50% of portfolio)
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| 25 year. MF, 2016 |
The grouping of DIS and APPL had an expected ROI of 6903.03%. In the graph above I have sectioned off a pie chart to show how my portfolio was divided.
The three investments that I made are in all different stock sectors. Nike is ruled under consumer goods, Disney is entertainment, and Apple is electronics. I wanted to make sure that the companies I was investing in were not all selling the same type of thing. I wanted to have a lot of diversity so my investments fall into different categories. Throughout this process I made a few assumptions for the sake of the project:
-The ROI will stay the same
-The stock market won’t crash during the 25 years I am investing
-The real estate market won’t crash.
After a lot of investing, all of my goals will become a reality. I invested in the right companies and based on the math I did, all of my goals should be reached by the time allowed for each one.
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References:
"Apple Inc's ROI per Quarter." Apple Inc (AAPL) Return on Investment ROI Quarterly, Average High and Low, Overall Ranking from Mar 26 2016 to Mar 28 2015. CSI Market Company, 2016. Web. 29 Oct. 2016.
"AAPL Profile | Apple Inc. Stock - Yahoo Finance." AAPL Profile | Apple Inc. Stock - Yahoo Finance. Yahoo, n.d. Web. 29 Oct. 2016.
"BRING INSPIRATION ANDINNOVATION TO EVERYATHLETE* IN THE WORLD." About Nike. Nike, n.d. Web. 29 Oct. 2016.
"DIS Profile | Walt Disney Company (The) Commo Stock - Yahoo Finance." DIS Profile | Walt Disney Company (The) Commo Stock - Yahoo Finance. Yahoo, n.d. Web. 29 Oct. 2016.
"NKE Profile | Nike, Inc. Common Stock Stock - Yahoo Finance." NKE Profile | Nike, Inc. Common Stock Stock - Yahoo Finance. Yahoo, n.d. Web. 29 Oct. 2016.
"Nike, Inc. (NKE) Ownership Summary." NASDAQ.com. Nasdaq, n.d. Web. 29 Oct. 2016.
