Peter age 32 is a vice president of an up and coming Softwar

Peter, age 32 is a vice president of an up and coming Software Company. His bonus this year is $750,000. He plans to marry next year. Peter came to you, as his financial planner, to recommend what to do with the bonus. He is looking to start his own software company is ten years and wants to have a guaranteed financial positon so his new wife never has to work should something happen to him. They are expecting a baby this winter. He has a defined compensation retirement plan wherein the company puts in $40,000 a year which currently has his mother as the beneficiary. His current debt includes a mortgage on a San Francisco apartment of $700,000 (FMV of $1,200,000) and $90,000 on his Mercedes (FMV of $100,000). Please provide some possible solution that Peter can take and explain why.

Solution

From the facts of the case of Peter, it seems Peter is currently not having many fianancial commitments, but in the upcoming nearby period he will be having so. As Peter is about to marry soon and have a baby, he cannot invest money for the long term as he would be in the need of liquidity. Also Peter cannot invest the money at risky place as he needs security for his wife.

The good option available to Peter in this scenario is to invest some amount in Liquid fund and some amount in debt funds as the same would be less risky and liquid.