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Individual Financial Planning - Case Study Example

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Statement of Advice: What this document is about: This statement of advice is for the clients Mr. Robert Halfpenny and his wife Dina. This statement of advice is drawn from the information provided by the client and are based on the investment objectives, investment horizon and risk preferences of the client…
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Individual Financial Planning
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Download file to see previous pages They expect to live for the next 25 years. Their estimated capital at the time of retirement will be $ 474,780.44. My advice is to invest this capital in the ratio of 60: 40 in investment grade bonds and high dividend payout equity stocks. That means 60% or $ 284,868.264 should be invested in investment grade bonds. 40% or $ 189,912.176 should be invested in equity stocks. The annual yield of investment grade bonds estimated by me is 6.6% (based on historical yields). The annual returns of equity stocks estimated by me (based on historical returns) are 18%. This investment will give the clients an annual income of $ $ 52,985.4971 per annum and fulfill their investment objectives. Why is my advice appropriate? My advice is appropriate for you because: i) It will enable you to achieve your investment objective of earning a yearly income of $ 50,000 in the years after your retirement. ii) It is within your risk preferences. iii) It will create a diversified portfolio. iv) It also leaves aside capital for the clients to pursue their hobbies of camping and traveling. Risks in my advice: The main disadvantages of my investment advice are: 1) The actual returns on the investments in equity stocks may be different from the estimated ones. This is due to the inherent market risks. 2) The estimated yield on investment grade bonds may be different from the historical yields. What else do you need to know? ( Fee and Commission) Why should you trust me? I have extensive experience in financial planning. Over the years I have acquired for myself a reputation of ethical professional behavior. I have supported my every advice in this statement with clear and transparent reasons. Based on my track record, my professional qualifications and competence, I see no reason why you should not trust me. Fee & Commission: My fee for preparing this advice is $ 7000. In case the clients decide to follow my advice and allow me to manage their investment portfolio, I will charge a management fee of 1% of the portfolio size, per annum. Section 1: Important Information about you: Your goals and objectives: Investment objectives of the clients: An after-tax income of $ 50,000 per annum after retirement. The clients are spouses. Their current age is 50 years. Both of them intend to retire at the age of 60. They expect to live till the age of 85. The clients also want to have access to some initial capital so that they can pursue their hobbies of camping and traveling after their retirement years Your personal information: Client and Spouse: Item Client Spouse/Partner Title Mr Mrs Surname Halfpenny Halfpenny Given & preferred names Robert (Bob) Dina (Din) Home address 12 Median St, Urbania, NSW Ditto Business address - - Contact phone 02 49 888444 (H) - Age 50 yrs 50 yrs Smoker Yes No ? Yes No ? Expected retirement age 60 yrs 60 yrs Your financial information: Employment Details, Income & Expenditure Employment Details: Item Client Spouse/Partner Occupation Production Supervisor Astrologer Employment Status Self employed ? Employee Self employed ? Employee Not employed Pensioner Not employed Pensioner ? Permanent Part-time Permanent ? Part-time Casual Contractor Casual Contractor Business Status Sole trader Partnership Sole trader Partnership Private co. Trust Private co. Trust Other information, notes, questions: Dina has worked within a clairvoyant practice for a few years now and her pay is $14,500 ...Download file to see next pagesRead More
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