Savings and Investment Strategy Analysis Assessment Practice Part A

Assessment Practice Part A

Create a Savings Strategy Plan

You want to test how good investing into the SP500 index is. You have a savings account (tax-free) in which you add 100GBP every month. You have made an investment account in which you pay 100GBP every month into the SP500 index. Your parents as well asked you to put 100GBP every month for your baby-brother/sister into the FTSE100 index.

1. Create a function (or functions) that track the performances of the three plans, over a span of 20 years. How much each fund has accumulated?
2. Consider potential taxes that will have to be paid in the end.
3. Consider a 2.75% transaction fee when you cash out from the investment funds.

Since you do the investments, you do not have to pay management/commission fees.

Write a report where you showcase the performances (1000 words approx). Examine, briefly, in the literature what are some investment strategies that are introduced. What are their expectations? What are the pros and cons of the strategies you used? Based on the literature, which strategy you would opt for?

Assessment Summary and Academic Mentor Guidance Overview

This assessment, titled “Savings Strategy Plan Practice Part A”, required the student to develop a comprehensive financial savings and investment strategy simulation to evaluate the performance of three investment plans over a period of 20 years.

The three financial plans to be assessed were:

1. A personal savings account with monthly deposits of £100 (tax-free).
2. An SP500 index investment account with monthly deposits of £100.
3. An FTSE100 investment account with monthly deposits of £100 on behalf of a sibling.

Key Pointers to be Covered:

• Develop a function (or multiple functions) that track the growth of each investment over 20 years.
• Calculate and compare the total accumulated value of each fund after 20 years.
• Incorporate realistic financial factors:
  • Taxes applicable upon withdrawal.
  • A 2.75% transaction fee applied when cashing out from the investment funds.
  • No management or commission fees, since the investment is self-managed.
• Prepare a 1000-word analytical report showcasing the performance of all three plans.
• Conduct a brief literature review on popular investment strategies.
• Compare the chosen strategies, highlighting their pros and cons, and justify which one would be most suitable based on findings.

Mentor-Guided Approach: Step-by-Step Process

The academic mentor guided the student through a structured, analytical, and data-driven process to approach the assessment effectively. The process involved the following steps:

Step 1: Understanding the Objective

The mentor began by helping the student interpret the goal of the task to test and compare the effectiveness of savings versus investment strategies. The focus was on understanding how consistent monthly contributions perform differently in traditional savings versus market-based investments (SP500 and FTSE100 indices).

Step 2: Designing the Computational Framework

Next, the mentor assisted the student in structuring functions for simulation:

• Functions were created to calculate compound growth using monthly contributions over 20 years.
• Variables included initial principal (0 GBP), monthly deposits (100 GBP), and annual average returns for SP500 and FTSE100.
• The mentor emphasized including transaction fees (2.75%) and taxation effects to ensure realism.
• The savings account was treated as a constant growth plan with minimal or no risk, while the index funds introduced market volatility considerations.

Step 3: Data Interpretation and Comparison

After computing the future value of each investment:

• The mentor guided the student to tabulate and visualize results, comparing the accumulated values under different conditions.
• The focus was on identifying long-term benefits and drawbacks of high-risk vs. low-risk investment options.
• The student was encouraged to interpret results not only numerically but also in the context of risk tolerance, liquidity, and expected returns.

Step 4: Literature Review and Theoretical Alignment

The mentor then directed the student to review academic and financial literature on investment strategies such as dollar-cost averaging, index investing, and diversification.
The discussion centered on:

• The expectations and rationale behind long-term index investing.
• Advantages: compound growth, inflation protection, and market performance linkage.
• Disadvantages: volatility, potential downturns, and delayed access to funds.

Step 5: Critical Evaluation and Recommendation

The student, under mentor supervision, evaluated the performance outcomes:

• SP500 and FTSE100 generally outperformed the savings plan over 20 years, despite market risks.
• However, the savings account offered stability and liquidity, suitable for risk-averse investors.
• Based on the analysis and literature, the mentor helped the student conclude that a balanced approach, combining savings and index-based investments, provides both safety and growth potential.

Step 6: Structuring the Report

Finally, the mentor guided the student on report writing, ensuring it covered:

• Introduction (purpose and scope of the strategy)
• Methodology (functions, parameters, and assumptions)
• Results and Discussion (comparison and interpretation)
• Literature Review (academic backing)
• Conclusion and Recommendations (final insights and strategy selection)

Outcome and Learning Achievements

By completing this assessment, the student successfully:

• Demonstrated the ability to analyze and compare financial strategies using quantitative methods.
• Applied real-world financial principles such as compounding, risk-return tradeoff, and transaction costs.
• Enhanced understanding of investment strategy evaluation through both computation and literature review.
• Developed practical financial planning and analytical skills, aligning with core learning objectives in data interpretation, critical reasoning, and strategic decision-making.

Get Inspired by This Sample But Make Your Submission 100% Original

Looking for a reliable example to understand how to structure your assignment effectively? You can download the sample solution provided above to see how professional academic writing is done from research and analysis to formatting and referencing.

However, please note that this sample is strictly for reference and learning purposes only. Submitting it as your own work can lead to plagiarism issues and academic penalties.

If you want to submit a unique, plagiarism-free, and custom-written solution, our expert academic writers are here to help. Every assignment we deliver is tailored to your topic, written from scratch, and checked with advanced plagiarism detection tools to ensure originality and quality.

Why order a fresh assignment solution?

• 100% plagiarism-free and original content
• Customized as per your assessment requirements
• Written by subject-specific academic experts
• Delivered on time with guaranteed confidentiality

Take the smarter route to academic success learn from the sample, but submit your own original work.

Download Sample Solution  Order Fresh Assignment