FINANACIAL PLANNING PAPER

Short Paper

Case: The Perezes’ Good Fortune

Angel and Marie Perez own a small pool hall located in southern New Jersey. They enjoy running the business which they have owned for nearly 3 years. Angel, a retired professional pool shooter, saved for nearly 10 years to buy this business, which he had his wife own free and clear. The income form the pool is adequate to allow Angel, Marie, and their children, Mary (age10) and Jose (age 4), to live comfortably. Although he lacks formal education beyond the 10^th grade, Angel has become an acid reader. He enjoys reading about current events and personal finance, particularly investing. He especially likes Money magazine, from which he has gained numerous ideas for better managing the family’s finance. Because of the long hours required to run business, Angel can devote 3 to 4 hours a day (on the job) to reading.

Recently Angel and Marie were notified that Marie’s uncle had died and left them a portfolio of stocks and bonds with a current market value of $ 300,000. They were elated to learn of their good fortune but decided it would be best not to change their lifestyle as a result of this inheritance. Instead, they want their newfound wealth to provide for their children’s college educations as well as their own retirement. Hey decided that, like their uncle, they would keep these funds invested in stocks and bonds.

Angel felt that in view of this plan, he needed to acquaint himself with the securities currently in the portfolio. He knew that to manage the portfolio himself, he would have to stay abreast of the securities markets as well as the economy in general. He also realized that he would need to follow each security in the portfolio and continuously evaluate possible alternative securities that could be substituted as conditions warranted. Because Angel enjoyed using his spare time to follow the market, he strongly believed that with proper information, he could manage the portfolio. Given the amount of money involved, Angel was not too concerned with the information costs; rather, he wanted the best information he could get at a reasonable price.

Question:

1.      Explain what role the Wall Street Journal and /or Baron’s might play in meeting Angel’s needs? What other general sources of economic and current event information would you recommend to Angel? Explain.

2.      How might Angel be able to use the services of Standard & Poor’s Corporation, Mergent, and the Value Line Investment Survey to learn about the securities in the portfolio? Indicate which, if any, of these services you would recommend, and why?

3.      Recommend some specific online investments information sources and tools to help Angel and Marie manage their investments.

4.      Explain to Angel the need to find a good stockbroker and the role the stockbroker could play in providing information and advice. Should he consider hiring a financial adviser to manage the portfolio?

5.      Give Angel a summary prescription for obtaining information and advice that will help to ensure the preservation and growth of the family’s newfound wealth.