Investing Towards the Future

In unit 2, Wealth and Wages, of Economics we learned about investing and the different things you can invest in such as stocks, mutual funds, or bonds. For the math portion of the class we delved further into matrices by using them to solve systems of equations. For our action project we were given an imaginary scenario where we had been gifted money that was put into a savings account for 18 years. With this money we had to invest it into companies of our choice to reach our three SMART goals, a 1 year, 5 year, and 25 year. The companies I invested in were General Electric, Apple, and Disney, the more in depth analysis is in my post. It had been difficult deciding what companies to invest in and how much of the money I was granted should go into each of my goals. I loved doing this project, despite the hardships, because I will be ale to carry this knowledge with me for the rest of my life. It will make financial decisions easier to deal with and understand. Please enjoy my investment portfolio below.
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We were given a scenario where I was gifted with $49,128.87 from my guardian angel. With this I decided to invest in companies that are in line with my values and investment philosophy, but will also stay in line with my goals. Below are my three financial goals.

1-year goal: Have pocket money to spend in Europe ($5,000)
5-year goal: Get a custom made motorcycle ($21,000)
25-year goal: Own a bookstore with small cafe  ($450,000)

I value multiple types of companies, especially ones that focus on innovation. The innovative are always looking to improve what exists, making it more efficient and, hopefully, cheaper. This will help guarantee that those companies will be around for many years. Children are our future so I highly value companies that are family-friendly, they inspire young people to do things and enjoy life. Being passionate profit-driven brings forth the best the company has to offer. They will try their hardest to produce a product that will do well and make people happy. I believe in watching the economy to look for trends, this way I will be able to predict what will happen with my investments. By waiting out the bumps in the stock I will make more money in the long run.

I ended up choosing to invest in three different companies - Disney, whose share prices are $93.05, General Electric, whose share prices are $28.92, and Apple, whose share prices are $113.72. Each of them are leaders within their own fields and encompass the majority of my values. The two companies I liked the most are Disney and General Electric, below is more information on these two companies.

Walt Disney Corporation: Disney is in the entertainment industry and they are matchless in their reach. They have one of the largest shares in film, television, animation, merchandising, and theme parks industries and have shown continual growth since they opened. They even say in their mission statement "The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information" which only shows the dedication they have towards their work. They have a P/E ratio of 17.84, compared to the industries 28.60, and a dividend yield of 1.53%. With new Marvel, and now Star Wars, movies coming out every year from now to 2020 there is no doubt that Disney will continue to grow. Many people grew up watching Disney, be it movies or television shows, and it brings them joy. The Disney Corporation covers all the things I value and then some.

Walt Disney Stock Price. 2016. Via Google.

General Electric: General Electric is involved in all sorts of innovations thus the reason why it is in the diversified industrial industry. Their products and services range from airplane engines to medical imaging. Some inventions they were involved in are alarm clocks, light bulbs, televisions, and turbines.,and those are only a few. They are also involved in power, renewable energy, healthcare - the list goes on. With so many fields in their grasp they are able to take innovations made in one field and apply it to the rest. General Electric has a P/E of  27.32 and a dividend yield of 3.1%. Compared to the industries P/E which is 23.82 meaning over the next few years GE has some big things planned. This company is constantly growing in multiple areas.

General Electric Stock Price. 2016. Via Google.

The time horizon is extremely important because it will affect how much money you will make when investing. In this case time was on my side due to my most important goal being in 25 years, giving my money more time to accumulate and increase. With all this in mind this is how I invested into my 1, 5, and 25 year goals:

Portfolio I - 1 Year Goal

$4,912.89 (10% of money allotted)

30 shares of AAPL @ $113.72 ($3439.02 total) (70% of portfolio)

5 shares of GE @ $28.92 ($1473.87 total) (30% of portfolio)

The ROI for investing in these two companies is 18.06%. After one year I should have made $5,800.16.

Portfolio II - 5 Year Goal

$9,825.77 (20% of money allotted)

43 shares of AAPL @ $113.72 ($4912.89 total) (50% of portfolio)

52 shares of DIS @ $93.05 ($4912.89 total) (50% of portfolio)

The ROI for investing in these two companies is 233%. After five years I should make around $22,894.04.

Portfolio III - 25 Year Goal

$34,390.21 (70% of money allotted)

295 shares of DIS @ $93.05 ($27512.17 total)  (80% of portfolio)

190 shares of GE @ $28.92 ($5502.43 total) (20% of portfolio)

The ROI for investing in these two companies is 1254.28%. After twenty-five years I will make about $465,739.74.

Total Investment Portfolio Value: $494,433.94

I expect to make this much, which is significantly over each goals amount, but even if I under perform I should sill be within my target range.

This may sound a little risky, however according to Rutgers University's Risk Tolerance Quiz I have a 27 risk tolerance. Meaning that I have an average or moderate tolerance towards risk and am unlikely to get involved in highly risky situations, financially or personally. However I'm not overly cautious when taking risks since I analyze in order to take good calculated risks.

TS. Risk Tolerance. 2016. GCE Lab School

Assumptions:

1. Assuming that ROI holds steady (or at least does not drop significantly) there will be no changes in my ending investment.
2. I have assumed that companies will last and will remain at the head of their field.
3. I assume that, even if my goals don't go as planned, I will still make enough money to be in the ball park of my goal.

References:

"Apple."csimarket.com.N.P. N.D. Web. 27 Oct, 2016.

“General Electric Return on Investment.” CSI Market. N.p.,n.d.Web. 25 Oct. 2016

“Investment Risk Tolerance Quiz.” Rutgers. N.p.,n.d. Web. 28 Oct. 2016.

New York Stock Exchange. 2016. NYSE.

"Walt Disney." csimarket.com. N.P. N.D. Web. 28 Oct, 2016.

“Walt Disney DIS”. MorningStar. N.p.,n.d. Web. 27 Oct. 2016.