OutlineI Introduction II Short-term and long-term life objectivesIII Current financial situationA). Balance Sheet (Statement of Net Worth)B). Income and statement C). Tax calculation D). Tax liability VI The asset allocation of Norton and Fergie’s total assets, V Discussion of the issues arising from their financial situation, VI Superannuation adequacy for their retirementVII Assessment of insurance arrangements VIII Discuss possible options for legally minimising ReferencesIntroduction This is financial plan which will assist the Norton and Fergie to make investment and saving decisions. It contains an opinion however the financial planner shall not be held lay able for the performance of investment decisions made from his recommendation.
In the report there will be a budget cash flow statement and taxes that will be charged. It will have short-term and long-term life objectives of the clients. The short-term and long-term life objectives offer a general analysis and four specific types of objectives. The general analysis will look at the overall financial position of the client. The specific objectives will help the client plan to pay off debts, save for their retirement, protect their income, and save for round the world cruise on the Costa Darwindia.
Short-term and long-term life objectivesThe couple is contemplating to make savings for round the world cruise on the Costa Darwindia estimated to cost them $88,000 and invest in growth assets. They have also priorities of settling short term and medium term needs so he will be free to invest to gain some capital and to prepare for the presupposed future needs. These include the settling of credit card facility of $20,000, payments of a personal loan which was used to purchase Ford Falcon car immediate clearance of overdraft facility of $ 5600.
The couple is pursuing this as their short and long-term objectives which they need to fulfil. To attain these objectives, the couple will need proper financial planning based on their current financial income and expenses as well as their liabilities. This financial plan/ statement of advice offers detailed information both qualitative and quantitative that will assist Norton and Fergie achieve these objectives. Current financial situation Currently the couple is employed at a salary of $90,000 and $50,000 p. a for Norton and Fergie.
They also own a house worth $600,000 with contents worth $ 84,000, they also posses two cars of a street value of $50,000. The couple has invested in managed funds as well as in the stock market at $40,000 and$30,000 respectively. The following is the income and expenses statement, aggregated asset/liability statement and tax income statement reflecting their situation. Balance Sheet (Statement of Net Worth)Description Norton FergietotalAssets Town house 600,000Household contents 84,0002cars 50,000Investment in cash mgt trust 120,000Savings 7,500Investment in managed funds 40,000Stock 30,000Superannuation 90,00060,000150,000Deposits 12,000Mortgages (40,000)Credit card (20,000)Personal loan (40,000)Overdraft (5,600)mortgage(400,000)Net worth587,900Income and statement Incoming Norton FergetotalGross salary90,00050,000130,000Received Superannuation contribution (9%) 8,100 4,500 12,600Interest from deposit (three deposit) 1502.5% interest on transactional bank 188Dividend income 1,424Total cash in flow144,362Cash outflows Income tax(20,922)Living expenses (950 x52)(49,400)Interest on overdraft 15% (840)Interest on personal loan (4,800)Interest on mortgage (33,600)Interest on credit card (3,400)Superannuation contribution (9%) (8,100) (4,500) (12,600)Total cash outflow 125,562Net cash saving 18,800Savings in bank 7,500Total savings 26,300Workings i).
Superannuation contribution (9%) of basic salary ii). Interest on overdraft 15% of 5,600=840iii). Interest on loan 12% of 40,000iv).
Interest on credit card 17% of 20,000=3,400v). Interest on loan 8.4% of 40,000v) it is assumed the bank balance for transactional bank was uniform monthly for 12months v) interest on term deposit is for three months that is the amount earnedvi) dividends Company Investment Current prices No. Of sharesDPS Dividends Woolworths 7,50036.42061.26259.56Telstra 7,5004.9215240.28426.72AGL Energy 7,50015.864730.61288.46Meyer 7,5003.1723660.19449.5430,0001,424.28Tax calculation Tax paid by the individuals will depend on their income bracket. The following is tax calculation for the husband and wife. Taxable income is shown below