University of Toronto Haku19 Group Case Study Questions Case Study: Paul is 24 and is employed in his first full-time job. He rents an apartment with Keit

University of Toronto Haku19 Group Case Study Questions Case Study:

Paul is 24 and is employed in his first full-time job. He rents an apartment with Keith, his partner. They are hoping to buy a house in three years. Paul enjoys his job and thinks there are good opportunities for advancement. His employer has set up a retirement pension plan. Paul can select from a number of mutual funds for his pension plan investment. He needs some advice on what type of mutual fund he should purchase for his retirement pension plan. Note: A Retirement Pension Plan (RPP) cannot be used for a Home Buyer’s Plan.

He is relatively conservative and would rate his risk level as 4 out of 10 (10 being high risk). Paul would rather have slow, steady growth than high ups and downs. He does not want to spend much time managing his investment – about 1 hour a month. He plans on leaving the funds in a retirement plan until his retirement.

With reference to the scenario illustrated above, you should answer the questions below with your group members:

Question 1: Do you think he should invest in debt, equity or a combination of debt and equity? Explain.

Question 2: Evaluate the risk factors and the potential return of your recommendation (low, medium or high) and type of return (interest, dividends and/or capital gains).