Money management Essay Example | Topics and Well Written Essays - 1500 words

Money management - Essay Example I have therefore decided to consider one of two options – a life insurance investment and a personally managed fund. Life insurance option If I invest the $500,000 with a life insurance company then I may be able to earn a stable income each year with adjustments for inflation. Based on discussions with my insurance company, Table 1 in Appendix 1 reflects the amount that I would receive if I invest in an insurance policy that makes adjustments for inflation and pays my estate the balance of my policy at death. The table shows an initial investment of $500,000 and indicates that over a 20 year period and assuming a 3.5% rate of interest and an inflation rate of 3%, I would be able to have an inflation adjusted income of $15,000 in year 1 continuing to $26,302 payment in year 20. This policy continues as long as I am alive. The balance on the account at year 20 suggests that there will be sufficient funds for me to earn an income many years after year 20 if I am still alive. The principal amount only starts declining in year 12 suggesting that I will be paid out of interest earned on the investment up year 11, after which payments will start affecting my principal. My total receipt up to year 20 would be $403,045.62 with a balance on the account of $443,861.55. This indicates a net gain of $346,907.17 (($403,045.62 + $443,861.55) – $500,000). Table 3 in Appendix 1 shows the relevant returns. Personally Managed Funds In the event that I choose to manage the funds personally then I would be able to make earnings at rates between 3 to 7 per cent. This fund would consist of a mixture of government bonds (at least 60%) and stocks. I would use the income generated from the fund in the first year – year 1 as a basis to determine my future income if I am to maintain the same standard of living. I therefore allow for an inflation rate of 3% as with the life insurance option. Table 2 in Appendix 1 provides information on this fund. An average rate of r eturn of 5% annually is assumed. The information indicates that after the first payment of $17,500 subsequent payments will require selling investments and therefore reducing the principal initially invested if I am to maintain the same standard of living year after year. Comparison of both options In comparing both options the life insurance fund has a lot to recommend it. It is secure, simple, provides good returns, safe, and has no sales or administrative charges (immediateannuities.com). i. The life insurance offer provides a stable income for the rest of the pensioner’s life and in some cases beneficiaries can receive the balance after death. The income streams from the personally managed fund are not likely to be as stable, even though this is assumed in Table 2. ii. The pensioner can relax and does not have to watch the market and report on interest and dividends as in the case of the personally managed funds. iii. Returns on life insurance funds are normally higher th an those on government bonds. The reason is that a portion of the principal is normally paid with the interest earned. However, the personally managed fund is a mixture of bonds and stocks. iv. The principal is normally safe in the case of the life insurance

Ethical Case Study Essay Example | Topics and Well Written Essays - 750 words

Ethical Case Study - Essay Example Although the act of Paige seems neutral since the negative consequences seem to be balanced out by the positive ones, yet analysis of the two positive and the two negative outcomes suggests that the two don’t weigh equal. The positive outcomes benefited only two people i.e. Liz and Paige whereas the negative outcomes affected a lot of people i.e. the hotel as a whole and also, the woman and her child. In addition to that, although the grant of $50 note to Paige seems to be a positive outcome for her, yet that is bribery and has negative impact not only upon the whole society but also for Paige who would be held accountable for her act in this world or/and in the world hereafter. Agreed that Liz had remained a hardworking and loyal member of the staff and deserved special treatment, but not if that had to come on the cost of others’ peace. Therefore, the negative consequences of Paige’s act outweigh the positive ones, so Paige’s action was wrong. According to the third course of action, Paige could have granted Liz access to the room, but with the condition that she would clear the room within a maximum of ten minutes as soon as the expected customer arrives. Doing this, Paige would have respected the hotel’s rules, satisfied Liz as well as the customer. So according to the utilitarian theory, Paige should have granted Liz with conditional access to the room. The theory of ethical hierarcicalism suggests that â€Å"[a]n actual person is more valuable than a potential person† (jan.ucc.nau.edu, n.d.). In light of this principle, at the time when Paige was conversing with Liz, Liz was the actual person because she was there and the woman and her child were... This essay discusses that although the act of Paige seems neutral since the negative consequences seem to be balanced out by the positive ones, yet analysis of the two positives and the two negative outcomes suggests that the two don’t weigh equal. The positive outcomes benefited only two people i.e. Liz and Paige whereas the negative outcomes affected a lot of people i.e. the hotel as a whole and also, the woman and her child.  This essay discusses that although the act of Paige seems neutral since the negative consequences seem to be balanced out by the positive ones, yet analysis of the two positives and the two negative outcomes suggests that the two don’t weigh equal. The positive outcomes benefited only two people i.e. Liz and Paige whereas the negative outcomes affected a lot of people i.e. the hotel as a whole and also, the woman and her child.  According to the third course of action, Paige could have granted Liz access to the room, but with the condition t hat she would clear the room within a maximum of ten minutes as soon as the expected customer arrives. Doing this, Paige would have respected the hotel’s rules, satisfied Liz as well as the customer. Paige should have granted Liz with conditional access to the room.   The theory of ethical hierarchicalism suggests that â€Å"an actual person is more valuable than a potential person† (jan.ucc.nau.edu, n.d.). In light of this principle, at the time when Paige was conversing with Liz, Liz was the actual person because she was there and the woman and her child were potential people as they were expected but not there. Therefore, Paige’s act of granting Liz access to the room was ethically justified. But another principle of the ethical hierarchicalism suggests that â€Å"A complete person is more valuable than an incomplete person† (jan.ucc.nau.edu, n.d.).   Concluding, the course of action that is deemed justifiable by both theories of ethics is for Paig e to grant Liz with conditional access to the room.