Description / Necessities
This evaluation comprises THREE (three) TASKS. Every Process has a number of components and all components needs to be answered so as to obtain the complete marks out of 100. Observe that the marks out of 100 will probably be transformed to 60% of your ultimate grade. Moreover, there’s a hurdle requirement on this evaluation that means that you will want to attain at the least 60% or extra to cross this unit. For calculations, I’d suggest exhibiting as many steps as potential in your calculation and dealing.
Some steering and recommendation to make sure the profitable completion of the evaluation:
1) Your responses needs to be written clearly and concisely inside a single phrase doc.
2) The place relevant, state all of your assumptions.
three) Your solutions ought to comply with the next minimal format:
i. Title Web page which is able to embody formal title; your title
ii. Desk of Contents together with headings and subheadings and web page numbers
iii. Process 1 – Case Research: James and Olivia
iv. Process 2 – Case Research: Lucy and Patrick
v. Process three – Private Case Research
vi. References (use the Harvard fashion of referencing).
four) Most Phrases: 2,000 (excluding Title Web page, Desk of Contents, References, Appendices).
Please observe that poor presentation/formatting, going over the general phrase restrict by greater than 10%, or failure to comply with directions could end in a penalty of marks of as much as 10%.
The phrase depend in every part is just a sign of how lengthy your reply needs to be at most. Should you go over or beneath it’s high-quality so long as your general report is throughout the 2,000 most phrase depend (not together with tables and references).
Process 1 – Case Research: James and Olivia (28 marks)
James is aged 42 and Olivia is aged 38. Olivia works a stay-at dwelling mum while James runs his personal consulting agency from an inside suburban workplace, which produces a mean web revenue of $150,000 earlier than tax. They’ve two kids, aged eight and 10 whom they count on will stay dependent till age 24 at which period the dwelling bills will lower by $13,000 p.a. for every youngster after they go away dwelling. They personal their very own home price $1,000,000, which is topic to a mortgage of $275,000. In addition they personal an funding property price $900,000, which is topic to a mortgage of $650,000. In addition they have an impressive bank card debt of $12,000. Each James and Olivia personal their very own vehicles. The couple’s dwelling bills complete $84,000 p.a. together with fee of a $27,600 p.a. annual mortgage fee. The couple wish to ship the kids to a non-public college from years 9 – 12 which is predicted to price $160,000 in complete. In occasion of demise of both James or Olivia, they estimate demise and medical bills to price round $12,000. James presently has life cowl of $150,000 in his superannuation fund (his present superannuation fund stability is $225,000) while Olivia has no life cowl, additionally they haven’t any different private insurances. James’ father handed away just lately at age 67 because of coronary heart illness, which appears to be a hereditary drawback in James’ household.
Required
a) What sort of insurance coverage insurance policies would you suggest for James and Olivia to guard their private dangers? Focus on the deserves for every of the sorts of insurance coverage insurance policies. (max. 400 phrases)
(eight marks)
b) Calculate how a lot extra life insurance coverage may be beneficial for James? Assume that protection is required by way of to present life expectancy (85 for females, 81 for males). Additional assume the reinvestment price is eight% each year.
(12 marks)
c) You observe that James’ present life cowl is in his superannuation fund. Focus on the benefits and downsides having his life cowl inside his superannuation fund as in opposition to having it in his personal title? (max. 250 phrases)
(eight marks)
Process 2 – Case Research: Lucy and Patrick (32 marks)
Lucy and Patrick, aged of their early 30’s, personal their very own dwelling price $1,000,000 and every have a automotive price roughly $30,000 every. They’ve the next funding belongings:
Merchandise Quantity Possession
Funding Property $900,000 Tenants-In-Frequent
Money at financial institution $200,000 Joint
Time period deposit – 2 12 months mounted $15,000 Patrick
Shares – Australian, blue-chip shares acquired in 2016 for $20,000 $80,000 Lucy
Managed fund – Aust. Shares acquired in 2015 for $15,000 $25,000 Lucy
Superannuation (each have binding demise nomination clauses) $300,000
$125,000 Lucy
Patrick
• The couple’s superannuation accounts are invested in a progress fund with the next allocations: Money 5%; Fastened curiosity 25%; Aust shares 35%, Property 10%; Worldwide shares 25%.
• Lucy earns $105,000 p.a. and Patrick earns $50,000 p.a. working part-time. The couple have 2 kids aged 16 and 18 years previous.
• The couple’s danger profile has been decided as conservative.
Required
a) Decide the couple’s general funding asset allocation utilizing the next desk format. Observe that your Excel spreadsheet must be ‘embedded’ into your report.
(9 marks)
Title of funding Money Fastened curiosity Property Australian shares Worldwide shares Complete
Complete – $
Complete – %
b) Is the couple’s present asset allocation in step with their danger profile? If not, what can be your ideas as to an acceptable asset allocation for the couple? Should you determined that the couple’s portfolio was chubby in a specific asset class, what issues may be encountered in re-balancing? (max. 250 phrases)
(eight marks)
c) Lucy and Patrick are contemplating buying the ASX listed inventory Xero Restricted (XRO). They discover that Xero has a really excessive price-to-earnings (P/E) ratio relative to different Australian shares akin to Woolworths (WOW). Holding all else equal, does a excessive P/E ratio essentially imply that Xero is a nasty funding relative to different shares with decrease P/E ratios? Why, why not? (max. 200 phrases)
(9 marks)
d) Advise as as to whether the investments are property or non-estate belongings. Ought to they re-structure such that every one the belongings are property belongings? (max. 200 phrases)
(6 marks)
Process three – Private Case Research (40 marks)
As a potential monetary advisor finding out MAA255 Monetary Planning, earlier than you begin arising with monetary plans for others, it may be worthwhile to start out a monetary plan for your self. Thus, on this activity you’ll tackle the function of each the consumer and the planner and will probably be serious about your retirement. Should you do make any extra assumptions alongside the way in which do state them explicitly. Listed here are some assumptions to start out you off:
• A graduate in monetary planning on common, earns about $55,000 a 12 months, you’ll be able to assume that this quantity is your beginning wage bundle (i.e. it consists of the superannuation assure contribution).
• Your wage itself is predicted to extend by 2.5% per 12 months that accounts for will increase as a result of CPI and any promotions all through your lifetime.
• You may assume the tax charges to stay fixed, and that inflation (CPI) is 2% each year.
• Your superannuation funds are invested in a progress possibility. The expansion possibility is predicted to generate a web return of 5.zero% each year (web of tax and costs) for the foreseeable future.
Observe that for every half, your Excel spreadsheet must be ‘embedded’ into your report. See Week 11 lecture recording…
Required:
a) You purpose at constructing wealth between now and if you retire inside your superannuation fund. One among your objectives is to retire in your 65th birthday. Put together an Excel spreadsheet exhibiting the quantity of collected superannuation for every year by way of until retirement. You need to use the desk beneath as a pattern for instance the buildup of your superannuation fund to retirement. You may assume the tax charges stay fixed and that you simply make no additional contributions or financial savings in direction of retirement. (most 100 phrases).
(12 marks)
12 months Age Wage
($) Opening
Superannuation
Stability ($) Superannuation
Assure
Contributions ($) Contributions
Tax (15%) Add Earnings
(Internet of tax & charges) Closing
Superannuation
Stability
2021 … 55,000 zero … … … …
Process three (continued)
b) As a part of your retirement, you wish to have preserve a sure high quality of life and also you consider that you’ll require the equal of $60,000 each year in as we speak’s (i.e. earlier than adjusting for inflation) out of your superannuation fund if you retire.
Primarily based in your reply in Half (a), focus on and justify whether or not your collected fund is sufficient on your retirement wants. You’ll need to finish an Excel spreadsheet illustrating the withdrawal of the collected superannuation commencing retirement. You need to use the beneath column headings in your unfold sheet for instance the discount / stability of your retirement funds.
No matter whether or not the funds had been or weren’t sufficient to fund your retirement in its entirety, calculate how a lot you would wish on the graduation of your retirement to satisfy your entire retirement wants by way of to the top of your anticipated life. (most 100 phrases)
(16 marks)
12 months Age Opening Pension stability Much less pension withdrawal (actual revenue required) Add web earnings (Internet of Tax & Charges) Closing Pension stability
20xx 65 … … … …
c) Focus on two methods you may undertake to assist enhance your monetary state of affairs in retirement. (most 500 phrases)
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