Financial Planning Case Study
Problems/issues:
• Mei Ling may not have enough money to cover her later years expenses;
• She had been a fairly aggressive investor, but she may not want to take very risky investment since she cannot afford to lose at her age.
Goals and objectives:
• Cash-flow management;
• Pay off the property investment loan;
• Superannuation adequacy and savings programs;
• Personal investing.
Assumptions:
• Taxation and other legislative conditions will remian stable;
• Income will incerease by 1% over the rate of inflation;
• The current dividend yield for direct share is 7%;
• The expected return for the investment of balanced managed fund is 7%;
• Income from rental property is $30,000 per year;
• Investment in account-based income stream, guaranted investment and high interest at-call deposit account all charge 2% ongoing management fees;
• Investment earnings from account-based income stream and guaranted investment are tax-free, and income stream payments are also tax-free;
• Superannuation and pension plan 1 is from a taxed source.
Risk profile:
More likely to be ‘Balanced’ than ‘Aggressive’
On this basis, I think an appropriate asset mix for her is:
• about 40% in inocme assets (such as, deposit products), and
• about 60% in growth assets (such as, some managed funds)
Strategies:
• Develop a workable budget and a savings plan (current expenses seem a little high at nearly $2,083 per week before tax);
• Spread investments across a number of differnet classes of assets, invest parts of asset in retirement income stream and parts in balanced managed fund;
• Use superannuation to pay off the property investment loan $400,000;
• The rest superannuation ($413,000-$400,000=$13,000), cash savings, and income from direct share portfolio could be put into a cash management account for emergencies and daliy expenses;
• Transfer SMSF to a low-fee, account-based income stream, she can withdraw the minimum 4% per year, while the
• Mei Ling may not have enough money to cover her later years expenses;
• She had been a fairly aggressive investor, but she may not want to take very risky investment since she cannot afford to lose at her age.
Goals and objectives:
• Cash-flow management;
• Pay off the property investment loan;
• Superannuation adequacy and savings programs;
• Personal investing.
Assumptions:
• Taxation and other legislative conditions will remian stable;
• Income will incerease by 1% over the rate of inflation;
• The current dividend yield for direct share is 7%;
• The expected return for the investment of balanced managed fund is 7%;
• Income from rental property is $30,000 per year;
• Investment in account-based income stream, guaranted investment and high interest at-call deposit account all charge 2% ongoing management fees;
• Investment earnings from account-based income stream and guaranted investment are tax-free, and income stream payments are also tax-free;
• Superannuation and pension plan 1 is from a taxed source.
Risk profile:
More likely to be ‘Balanced’ than ‘Aggressive’
On this basis, I think an appropriate asset mix for her is:
• about 40% in inocme assets (such as, deposit products), and
• about 60% in growth assets (such as, some managed funds)
Strategies:
• Develop a workable budget and a savings plan (current expenses seem a little high at nearly $2,083 per week before tax);
• Spread investments across a number of differnet classes of assets, invest parts of asset in retirement income stream and parts in balanced managed fund;
• Use superannuation to pay off the property investment loan $400,000;
• The rest superannuation ($413,000-$400,000=$13,000), cash savings, and income from direct share portfolio could be put into a cash management account for emergencies and daliy expenses;
• Transfer SMSF to a low-fee, account-based income stream, she can withdraw the minimum 4% per year, while the