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FIN2IFP: Introduction to Financial Planning - Exchange Traded Funds - Jerry - Jenny Jones - Case Study Assignment Help
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Subject Code: FIN2IFP
Notes
? The savings account balance is the expected closing balance as at 30 June 2017 and already incorporates all cash inflows and outflows made during the year.
? The opening savings account balance can be assumed to be $12,800.
? The super balances for both Jerry and Jenny are made up solely from the 9.5% compulsory employer contributions. The couple have not made any additional voluntary contributions at this stage.
? The couple’s superannuation is made up of the following: o Jerry: Cash 10%; Fixed Interest 35%; Property 15%; Australian shares 30%; International shares 10%. o Jenny: Cash 20%; Fixed Interest 40%; Property 10%; Australian shares 20%; International shares 10%.
Additional information / assumptions:
• You can assume that the Superannuation Guarantee Rate (9.5%) will remain the same until they retire
• Interest received on the savings account should be based on the opening savings account balance each year
• Term deposit interest rates can be assumed to remain unchanged. You can also assume that interest received on the term deposit is withdrawn as cash each year and forms part of the cash flow statement.
• The capital value of the shares is expected to grow by 5% p.a. The value of the family home is expected to grow by 7% p.a. whilst the contents and boat can be assumed to increase by the CPI. You can ignore changes to the value of the cars.
• All of the couple’s expenses will increase by the CPI each year
• The salary of Jerry and Jenny will increase by the CPI each year
• CPI is 3.0% p.a
• Superannuation earnings are to be based upon the opening superannuation account balance
• Annual loan repayments remain the same dollar amount each year until all debts are paid off
• Any cash surplus (deficit) is accumulated in the couple’s savings account.
• The couple’s eldest child Jack requires a laptop computer for school – expected the cost of $3,500 required during semester 2 2018.
• The credit card is used to pay their normal household expenses
• The couple advises that during the 2018/19 financial year, the kitchen will need renovating at an expected cost of $35,000. They expect to fund this by withdrawing me above FIN2IFP questiononies from their term deposit.
• The couple do not have private health insurance
• Use current tax rates for all tax calculations
SECOND MEETING – end of June 2017 - FIN2IFP
• Jenny advises that she is to be retrenched from her employment effective from 1 July 2018 and that she will receive a lump sum termination payment from her employer of around $15,000 in accrued annual and long service leave and other employment payments. Assume these are fully taxable. Jenny wants to now stay at home for a period to look after the children and will not seek to resume employment until 1 July 2019 (expected pre-tax salary of around $30,000 p.a. working 2.5 days a week; work related expenses of $500).
Finance AssignmentFinance Assignment
• To cover the lost income in the event of a retrenchment, the couple advise that although they would like to retain their current lifestyle as much as possible, they are prepared to reduce their entertainment expenses to a net $5,000 p.a. and reduce their travel and holiday expenses also to a net $5,000 p.a. commencing in July 2018. They do not believe they could cut back on much else.
Introduction to Financial Planning Jerry - Jenny Jones - Case Study Assignment Help
Assignment Task: FIN2IFP Case Study of Jerry and Jenny Jones 45 Trouble Street, Thornbury Jerry and Jenny Jones approach you for some financial planning advice. The couple earn a good level of combined income and enjoy a very comfortable lifestyle. They have accumulated a few investments but have not taken much interest in their superannuation balances. However, they have read a few reports of late which point out that the accumulated superannuation balances of many Australians will not be sufficient to support their retirement. The couple now feels that perhaps the time has come to seek some professional advice before it is too late. INITIAL MEETING – May 2017 1. Personal Details: Jerry Jones Address – 45 Trouble Street, Thornbury Age – 45 Health – good (smoker) Employment: Marketing manager with Support Beds -Salary of $105,000 p.a. plus 9.5% superannuation guarantee contribution based on salary -Employer allows salary sacrificing Jenny Jones Address - 45 Trouble Street, Thornbury Age – 45 Health – good (non-smoker) Employment: Part-time accountant (4 days a week) at Creative Accounts -Salary of $50,000 p.a. plus 9.5% superannuation guarantee contribution based on salary -Employer allows salary sacrificing The couple has 3 children: Jack (aged 14), Jade (aged 12) and Jasmine (aged 8). 2. Client objectives: • Build wealth between now and when they retire – expected to be when Jerry and Jenny turn 60 • The couple estimate they will require a combined real income of $58,000 per annum in present value dollars from their superannuation funds when they retire • They want an investment plan that is easy to manage • The want to ensure that their FIN2IFP overall investments are well proportioned based on their risk profile and of a suitable quality • To continue to have their children attend private schools. • They would like to minimise their tax liability as much as possible • They wish to reduce their level of debt as quickly as possible 3. Attitude to investment risk: The couple advise that they have a reasonably good knowledge and interest in financial markets but do not have the time to manage their investments themselves. They are prepared to take on some risk in order to achieve a higher rate of return but not an excessive amount of risk. They realise that there will be some short-term volatility in financial markets and are prepared to invest for the long-term. They also realise that their current investment allocation and plan is unlikely to provide them with an appropriate nest-egg in retirement.
Notes
? The savings account balance is the expected closing balance as at 30 June 2017 and already incorporates all cash inflows and outflows made during the year.
? The opening savings account balance can be assumed to be $12,800.
? The super balances for both Jerry and Jenny are made up solely from the 9.5% compulsory employer contributions. The couple have not made any additional voluntary contributions at this stage.
? The couple’s superannuation is made up of the following: o Jerry: Cash 10%; Fixed Interest 35%; Property 15%; Australian shares 30%; International shares 10%. o Jenny: Cash 20%; Fixed Interest 40%; Property 10%; Australian shares 20%; International shares 10%.
Additional information / assumptions:
• You can assume that the Superannuation Guarantee Rate (9.5%) will remain the same until they retire
• Interest received on the savings account should be based on the opening savings account balance each year
• Term deposit interest rates can be assumed to remain unchanged. You can also assume that interest received on the term deposit is withdrawn as cash each year and forms part of the cash flow statement.
• The capital value of the shares is expected to grow by 5% p.a. The value of the family home is expected to grow by 7% p.a. whilst the contents and boat can be assumed to increase by the CPI. You can ignore changes to the value of the cars.
• All of the couple’s expenses will increase by the CPI each year
• The salary of Jerry and Jenny will increase by the CPI each year
• CPI is 3.0% p.a
• Superannuation earnings are to be based upon the opening superannuation account balance
• Annual loan repayments remain the same dollar amount each year until all debts are paid off
• Any cash surplus (deficit) is accumulated in the couple’s savings account.
• The couple’s eldest child Jack requires a laptop computer for school – expected the cost of $3,500 required during semester 2 2018.
• The credit card is used to pay their normal household expenses
• The couple advises that during the 2018/19 financial year, the kitchen will need renovating at an expected cost of $35,000. They expect to fund this by withdrawing me above FIN2IFP questiononies from their term deposit.
• The couple do not have private health insurance
• Use current tax rates for all tax calculations
SECOND MEETING – end of June 2017 - FIN2IFP
• Jenny advises that she is to be retrenched from her employment effective from 1 July 2018 and that she will receive a lump sum termination payment from her employer of around $15,000 in accrued annual and long service leave and other employment payments. Assume these are fully taxable. Jenny wants to now stay at home for a period to look after the children and will not seek to resume employment until 1 July 2019 (expected pre-tax salary of around $30,000 p.a. working 2.5 days a week; work related expenses of $500).
Finance AssignmentFinance Assignment
• To cover the lost income in the event of a retrenchment, the couple advise that although they would like to retain their current lifestyle as much as possible, they are prepared to reduce their entertainment expenses to a net $5,000 p.a. and reduce their travel and holiday expenses also to a net $5,000 p.a. commencing in July 2018. They do not believe they could cut back on much else.
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