Bruce and Samantha Lee profile
The role of the adviser has been to provide the client with the financial advice and planning in order to gain their financial goals and objectives and enhance their wealth for the customers by exploiting their strategies that would be out of the scope of the client. The financial plan would be including your details and facts which would be helping me to formulate appropriate advises for the products which is to be suggested. In order to carry out the financial planning process in an appropriate manner, your goals and objectives needs to be specified appropriately so that a level of accuracy can be maintained in the financial planning process. The products and the services that the financial consultant are authorised to provide suggestions on are all financial products like the Australian equities and International equities along with investments in balanced funds.
This summary provides information regarding your needs and objectives and would also be considering your present situation for the purpose of framing of our advice. The advice considers different factors which is associated with superannuation and life insurance needs which you have at present and the same which you want to change as per the goals and objectives which you have established. The objectives which you ae looking to achieve with the help of the financial plan are discussed below in details:
- You would like to send their 2 younger children to a private school when they move into secondary school at age 12 and the couple would like to pay her fees up front so she does not have a HECS debt
- You would like to provide some additional financial support for Mitchell, when he becomes an adult.
- Bruce and Samantha, you both want to retire at the age of 60 and 65 respectively and after retirement you want to use up accumulated super funds.
- You have the intention to travel to Europe next year with the children for four weeks on a family holiday that is expected to cost $40,000.
The assets which are owned by the business are appropriately projected in the table which is presented below:
|
ASSETS |
Type |
ownership |
$Value |
|
Property |
Residential |
$ 840,000.00 |
|
|
Campervan |
Investment |
$ 28,000.00 |
|
|
Contents |
$ 150,000.00 |
||
|
Shares |
Direct |
$ 45,000.00 |
|
|
Cash |
Bank account |
$ 20,000.00 |
|
|
Vehicles |
$ 82,000.00 |
||
|
Bitcoin and term deposit |
$ 55,000.00 |
||
|
Managed fund |
|||
|
Superannuation |
$ 280,000.00 |
||
|
Office furniture |
$ 50,000.00 |
||
|
Total |
|
|
$ 1,550,000.00 |
|
LIABILITIES |
$Bal Owing |
Mthly Repayment |
|
Mortgage |
$ 420,000.00 |
$ 2,729.00 |
|
Mortgage |
||
|
personal loan |
$ 10,000.00 |
|
|
Credit card |
$ 12,000.00 |
$673.36 |
|
Finance |
$ 10,000.00 |
|
|
Other loans |
$ 15,120.00 |
|
|
Margin loan |
||
|
Finance |
||
|
Additional Payments |
|
|
|
Total |
$ 467,120.00 |
$ 3,402.36 |
The above table appropriately shows the assets which is managed by both of you and the same suggests that financial position of Bruce and Samantha is quite favourable and they can successful implement all their goals and objectives. The net worth of the couple is also an important consideration which can help in better financial planning for the couple.
Income Statement
|
INCOME |
Client 1 |
Client 2 |
|
PAYG – Annual |
$ 147,500.00 |
$ 112,000.00 |
|
PAYG – Monthly |
$ 12,291.67 |
$ 9,333.33 |
|
Net monthly |
$ 9,486.29 |
$ 6,744.42 |
|
Dividends |
$ – |
|
|
Interest |
$ 1,500.00 |
|
|
carer allowance |
||
|
Rent |
||
|
car allowance |
||
|
Total Gross |
$ 13,791.67 |
$ 9,333.33 |
|
SUPER -Conc |
Client 1 |
Client 2 |
|
Employer |
$ 1,136.98 |
$ 863.33 |
|
current s/s |
||
|
Total |
$ 1,136.98 |
$ 863.33 |
|
Annual |
$ 13,643.75 |
$ 10,360.00 |
|
Cap |
$ 30,000.00 |
$ – |
|
available |
$ 16,356.25 |
-$ 10,360.00 |
|
S/S per month* |
$ 1,363.02 |
-$ 863.33 |
|
Total Conc |
$ 13,643.75 |
$ 10,360.00 |
|
reduce/increase ss |
||
|
Try S/S amount |
$ – |
|
|
Net income |
$ 113,835.50 |
$ 80,933.00 |
The above table appropriately shows the income statement for the clients and the main contributions for super funds for the clients so that appropriate efficiency can be maintained and more savings can be generated from the activities.
As per the recent risk profile which is followed by you during the period shows that you want to pursue a growth risk profile so that you can effectively meet your goals and objectives in an effective manner. The analysis of the information which is provided by you shows that you are willing to invest in volatile assets so that you can achieve growth in the returns from your asset. The investment mix which you would be maintaining would be comprising of mostly growth assets so that the return can be generated from the investments which is undertaken by you.
|
Bruce’s % of Allocation |
|
|
Class |
% allocation |
|
Cash |
10% |
|
domestic fixed interest |
5% |
|
international fixed interest |
15% |
|
Defensive |
30% |
|
domestic shares |
15% |
|
international shares |
30% |
|
direct property |
15% |
|
listed property |
10% |
|
Growth |
70% |
|
Mark’s % of Allocation |
|
|
Cash |
10% |
|
domestic fixed interest |
5% |
|
international fixed interest |
15% |
|
domestic shares |
15% |
|
international shares |
30% |
|
direct property |
15% |
|
listed property |
10% |
The financial strategies which we are recommending for the purpose of making improvement in the operational structure of the business are discussed below in the form of recommendations
- You want to reduce the overall expenses which are presented in your budget and the same is related to the current lifestyle. We would be recommending you to reduce the costs by incorporating a proper budgeting plan so that the expenses can be controlled in an appropriate manner. Some of the expenses which are presented in your financial budget shows that you indulge in luxury spending for certain expenses such as holiday, entertainment, grooming which can be controlled by you to a degree so that your surplus increases. There is also another plus point which is associated with your budget which is if you are able to reduce the expenses than you would be having more funds in your hands and thereby there is scope of savings.
- One of the goals of the client is to enhance the superannuation and insurance requirements of the business. We would be recommending you to opt for salary sacrifice option so that you are able to enhance your contribution to superannuation fund and thereby also assist you take advantage of the tax situation of the business. As per the information which is provided to me, I can see you both have proper net earnings. It would be an appropriate plan to opt for salary sacrifice option as the same would help in systematically enhancing your returns and build up the superannuation funds more. The aim of salary sacrifice (packaging) is to enable an employee to receive a combination of income and benefits in a tax-effective manner. The salary sacrifice would also be assisting in appropriate development of projection of the financial results of the business. One of the main advantage of the salary sacrifice option is that it is tax effective and the same can help in appropriate generation of savings for both of you Samantha, you can also opt for salary sacrifice option which can also impact your savings appropriately. Both of you can contribute effectively towards savings for your future.
- One of the goals as you have specified with me is to meet the educational requirements of your kids and ensure that they get the best facilities in terms of education. I would be suggesting that you create an investment fund in the name of Mitchell so that proper funds can be allocated in the same and further savings can be generated. I would be asking both of you to contribute around $ 10000 in total to the fund which would give you appropriate savings at the end of the period. This would be creating a proper fund reserve to support your kids for further educations.. From the net income which you are able to generate, I would say that this should not be a problem for both of you.
- In addition to this, your fact sheet further shows that you want to travel to Europe with your kids next year and I would say that a mere bank deposit of the term deposit which is likely to mature next year would effectively serve your purposes and help in achieving your goals in an effective manner. It is further to be noted that such term deposits would help in maintaining your liquidity position in an effective manner.
- One of the main advises which I would be suggesting to both of you and especially Bruce is that you need to take medical insurance as the family background suggests that there have been problems related to medical illness. I would be suggesting that you take up life insurance, TPD insurance and income protection insurance so that proper security is available to you. The coverage which is provided by your super funds would not be appropriate as the same does provide the required level of safety which is necessary. This is an important point that you must consider so that proper level of efficiency can be maintained.
- In addition to this, Bruce and Samantha needs to hand out the power of attorney so that proper planning can be done. This is done so that proper estate planning can be done for your children and further appropriate retirement planning can be done.
|
Current |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
||
|
Income |
Bruce |
$ 147,500 |
$ 153,400 |
$ 159,536 |
$ 165,917 |
$ 172,554 |
$ 179,456 |
|
Samantha |
$ 112,000 |
$ 116,480 |
$ 121,139 |
$ 125,985 |
$ 131,024 |
$ 136,265 |
|
|
Total |
$ 259,500 |
$ 269,880 |
$ 280,675 |
$ 291,902 |
$ 303,578 |
$ 315,721 |
|
|
Medicare Levy |
Bruce |
$ 2,950 |
$ 3,068 |
$ 3,191 |
$ 3,318 |
$ 3,451 |
$ 3,589 |
|
Samantha |
$ 2,240 |
$ 2,330 |
$ 2,423 |
$ 2,520 |
$ 2,620 |
$ 2,725 |
|
|
Tax excluding Medicare |
Bruce |
$ 42,522 |
$ 44,705 |
$ 46,975 |
$ 49,336 |
$ 51,792 |
$ 54,346 |
|
Samantha |
$ 29,387 |
$ 31,045 |
$ 32,769 |
$ 34,561 |
$ 36,426 |
$ 38,365 |
|
|
tax including medicare |
Bruce |
$ 45,472 |
$ 47,773 |
$ 50,166 |
$ 52,655 |
$ 55,243 |
$ 57,935 |
|
Samantha |
$ 31,627 |
$ 33,374 |
$ 35,191 |
$ 37,081 |
$ 39,046 |
$ 41,090 |
|
|
Combined tax incl medicare |
$ 77,099 |
$ 81,147 |
$ 85,357 |
$ 89,736 |
$ 94,290 |
$ 99,025 |
|
|
Net Income |
Bruce |
$ 102,028 |
$ 105,627 |
$ 109,370 |
$ 113,263 |
$ 117,311 |
$ 121,521 |
|
Samantha |
$ 80,373 |
$ 83,106 |
$ 85,948 |
$ 88,904 |
$ 91,978 |
$ 95,175 |
|
|
Combined net income |
|
$ 182,401 |
$ 188,733 |
$ 195,318 |
$ 202,166 |
$ 209,289 |
$ 216,696 |
|
Current surplus |
$ 60,000 |
$ 64,090 |
$ 68,378 |
$ 72,872 |
$ 77,581 |
$ 82,514 |
|
|
Estimated net expenses |
$ 122,401 |
$ 124,642 |
$ 126,940 |
$ 129,294 |
$ 131,708 |
$ 134,182 |
|
|
Expenses + tax? |
$ 199,500 |
$ 205,790 |
$ 212,297 |
$ 219,030 |
$ 225,998 |
$ 233,207 |
|
|
Cost of Living* |
$ 89,653 |
$ 91,894 |
$ 94,192 |
$ 96,546 |
$ 98,960 |
$ 101,434 |
|
|
Car Loan Repayment* |
$ 32,748 |
$ 32,748 |
$ 32,748 |
$ 32,748 |
$ 32,748 |
$ 32,748 |
|
|
Surplus available |
$ 60,000 |
$ 64,090 |
$ 68,378 |
$ 72,872 |
$ 77,581 |
$ 82,514 |
|
|
Credit Card Repayment |
-$ 8,080 |
-$ 8,080 |
|||||
|
Available after credit card repayment |
$ 51,920 |
$ 56,010 |
$ 68,378 |
$ 72,872 |
$ 77,581 |
$ 82,514 |
|
|
Cash at Bank |
$ 20,000 |
$ 127,930 |
$ 196,308 |
$ 269,180 |
$ 346,761 |
$ 429,274 |
|
|
Cash at Bank |
$ 71,920 |
$ 127,930 |
$ 196,308 |
$ 269,180 |
$ 346,761 |
$ 429,274 |
|
|
Property |
$ 840,000 |
$ 861,000 |
$ 882,525 |
$ 904,588 |
$ 927,203 |
$ 950,383 |
|
|
Super contributions – employer |
$ 14,012.50 |
$ 14,573.00 |
$ 15,155.92 |
$ 15,762.16 |
$ 16,392.64 |
$ 17,048.35 |
|
|
$ 10,640.00 |
$ 11,065.60 |
$ 11,508.22 |
$ 11,968.55 |
$ 12,447.30 |
$ 12,945.19 |
||
|
Super balance |
$ 90,000.00 |
$ 90,439.00 |
$ 90,807.35 |
$ 91,099.77 |
$ 91,310.69 |
$ 91,434.24 |
|
|
Earnings |
$ 4,500.00 |
$ 4,521.95 |
$ 4,540.37 |
$ 4,554.99 |
$ 4,565.53 |
$ 4,571.71 |
|
|
Tax on contributions |
$ 2,101.88 |
$ 2,185.95 |
$ 2,273.39 |
$ 2,364.32 |
$ 2,458.90 |
$ 2,557.25 |
|
|
Tax on earnings |
$ 675.00 |
$ 678.29 |
$ 681.06 |
$ 683.25 |
$ 684.83 |
$ 685.76 |
|
|
Balance |
$ 91,723.13 |
$ 92,096.71 |
$ 92,393.28 |
$ 92,607.19 |
$ 92,732.50 |
$ 92,762.95 |
|
|
Fees |
$ 1,284.12 |
$ 1,289.35 |
$ 1,293.51 |
$ 1,296.50 |
$ 1,298.25 |
$ 1,298.68 |
|
|
Final Balance |
$ 90,439.00 |
$ 90,807.35 |
$ 91,099.77 |
$ 91,310.69 |
$ 91,434.24 |
$ 91,464.26 |
The financial projections which is presented above appropriately shows that expected cash flow and profits which can he anticipated by you. The calculations have considered certain assumptions which are also portrayed appropriately below the table. In addition to this, the financial projection shows analysis for a period of 5years so that appropriate assessment can be made regarding the trends which are present in the market. The projections which are presented in the above table appropriately shows that your goals and objectives can be fulfilled. It is therefore imperative that you need to implement the financial plan so that more efficiency can be brought about in the operations of the business.
Conclusion
The above analysis further shows that proper financial planning has been undertaken so that proper projections can be done and proper planning can be initiated in the operational activities of the business. The above discussion further shows financial projections for the clients and appropriately enlists the financial goals and objectives of the clients. In addition to this, the discussion also shows recommendations which needs to be implemented by the couple so that they can further strengthen their position and maintain a certain pace towards their goals and objectives.
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