Risk Management RISK MANAGEMENT GRACE SARKAR Order No. 351299 08 January RISK MANAGEMENT Review, estimate, and purchase insurance coverage for both Charles and Alice Charles and Alice must purchase 20-years’ term insurance for at least one million dollars each. For the life style they envisage, they need insurance protection that will keep them well heeled and free of health concerns should something happen. This will cost Charles about $2000 annually. For Alice, the cost may be lower at around $1400 annually (Types of policies, 2010). Develop and implement an investment plan to achieve the family’s objectives If Charles is able to save monthly $1000, he could invest this in Clipper stock fund or Roth.
Investing with Roth IRA will help Charles save in taxes because the money will be tax-free when Charles retires. Charles plans on retiring when he is 55. Translating $1000 x 12 months, Charles saves $12000 annually and this is compounded to $120,000 plus interest or appreciation at the end of ten years. At the current rate, Charles could be the owner of at least $300,000 by this investment alone at the end of ten years.
Calculating on for 20 years on the same pattern will see Charles through as a millionaire (Waggoner, John; 2005). Develop a strategic plan for Alices private duty nursing service Obviously Alice will start the nursing home at her residence. It will be easier to operate from the residence and she can handle her house chores along with administering the nursing home. She may have to step in on field work when there are emergencies. Later on, in a couple of years when she is well established, she could handle administration and pass on field work totally to nurses who are registered in her firm.
Her financial contributions will help Charles with the family savings and investments more confidently (Home Health Care That Feels Like Family). Implement Alice’s private duty nursing service Alice will first have to register nurses to do full-time or hourly duties. For this, she could either advertise or use her contacts. She may also have to be ready with medical and medical aid supplies such as bandages, gloves, catheters, etc. There will be initial investment to pay for these medical aids and also furnish a room to serve as office for the nursing home. Purchase a beach home in Florida Charles may have to buy the beach home using housing loan.
The cost will be approximately 2-3 million dollars for 2-3 bedrooms home. He could offset some of the cost by renting out the beach home when he is not living there (Miami’s Best Real Estate Online). Risk All investments carry risks and it is not possible to find investments totally risk-free. However, it is possible to greatly reduce risk factor by investing with robust companies that have been around for a while and have reputation for honesty and dependability. Initially, Alice may not have to spend on large-scale organizing for the nursing home except for some mandatory fees for registering with the local authorities.
Sources: Home Health Care That Feels Like Family, http: //www. nurseforce. com/index. html Miami’s Best Real Estate Online, http: //www. zilbert. com/ Types of policies, 2010, http: //money. cnn. com/magazines/moneymag/money101/lesson20/index2.htm Waggoner, John; Finding the right investment plan, 2005, http: //www. usatoday. com/money/perfi/columnist/waggon/2005-02-03-invest_x. htm