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Develop an Investment Plan

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Capstone Final Project

FIN 615

Investments and Portfolio Management

Instructor:- David Speicher

Author: Raju Maharjan


Develop an investment plan:-

As, we are new in investing stocks and bonds, we have chosen a moderate investor with midterm horizon profile with moderate growth expectation and hence, we are also expecting with moderate risk tolerance.

[pic 1]

Figure 1:Expected Moderate Asset Allocation

Detail on Asset allocation :-

Large Cap Stocks: 20 % of the available funds would be allocated to investing in large cap stocks. It will be allocated to following industries.

  • Innovative Electronic industries: About 50% of the large Cap stock investments will be made in these sectors. They have high risk but in return, it has possibility of higher return too.  The past 5 years historical price of these will be reviewed and will try to predict the return and will choose it from higher returnable company with lowest risk.
  • Internet Information Providers and technology sector:  After reviewing market outcomes on sectors, it seems with boom in internet usage and online business, these online sector has highest return in market but it also has the high risk high. We would like to invest the remaining 50% of large cap allocated fund in this sectors.


Mid cap stocks: 20 % of the available funds would be allocated to investing in mid cap stocks.

It will be allocated to following industries:-

  • Energy: - About 50% of mid cap stock’s allocated fund will be invested in this sector. From research, we consider this sector has blooming industry with low risk.
  • Biotechnology industry: From the research, we found that biotechnology industry is also booming everyday so hence, we will be investing about 30% in this industry
  • Innovative Electronics and technology sector: Remaining 20 % of mid cap’s stock allocated will be located to this sector.


Small cap stocks:-

Only 5 % of the available funds would be invested in small cap stocks.

  • HealthCare: Being moderate investor, we would consider Healthcare has lower risk market. Hence, this is the second sector I would choose to invest in. The investment will be made in a company that has shown to have good stability and steady returns in the future.
  • Basic Material and consumer goods: From research, we can find that this sector of industry is a fairly safe sector than other sector to invest in with not too many fluctuations across years and also we are only expecting low return with lower risk out of this sectors.


As my approach is a moderate investor, we think that it is necessary to have some fixed income securities. 40 % of the available funds would be allocated to  corporate bonds, government bonds, Treasury-bills/Notes and 15% of the available funds would be allocated as cash to provide higher liquidity and less risk.

[pic 2]

Figure 2:- Asset allocation based on sectors


Expected Return:-

[pic 3]

Figure 3:- Expected Average 10 year return

        We are investing as described above in the table. We had estimated the expected average 10 year return for each portfolio. Then, we use weighted average formula to estimated the total expected return. Therefore, 

Total Expected return


Deploy assets and Trade:-

Due to limited amount of  time on research and exercising above plan, we plan to implement asset allocation within above approach  but it was allocated as followings:-



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