Securing Eleanor's future with strategic planning.
Eleanor inherited a $1.8M Traditional IRA and $450K in taxable accounts after her husband's passing. Overwhelmed and grieving, she was unsure how to manage these assets to generate sufficient income to maintain her lifestyle while minimizing taxes and ensuring a legacy for her grandchildren. Eleanor also expressed interest in diversifying her portfolio internationally but was wary of currency risks and complexities.
Using the Interest Rate Parity Calculator, we helped Eleanor understand the relationship between interest rates and exchange rates, allowing her to make informed decisions about international investments. For example, by analyzing potential investments in Canadian bonds yielding 3.5% when US bonds offered 2%, we could determine if the expected change in the USD/CAD exchange rate negated the yield advantage. We determined through careful calculations and risk assessment that a small allocation (approximately 5%) to specific CAD-denominated bonds was appropriate given her overall risk profile, resulting in an extra $2,000 per year in income.
The Interest Rate Parity Calculator was used in conjunction with real-time market data to assess potential currency risks associated with international investments. Inputs included current spot rates, forward rates, and interest rate differentials.
$2,000 in increased annual income through strategic international bond allocation, coupled with a comprehensive estate plan to minimize future tax liabilities.
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