¶ … Advice (SOA): Financial Planning
Purpose of this document is to prepare a statement of advice (SOA) on the financial planning for David Smith and Brenda Smith to achieve their financial goals. The advice is to communicate important information to clients in order to make informed decision about their financial portfolios. This document is a Statement of Advice or 'SOA' used to explain my advice, and highlights the important points. Please, be sure to read all sections of the SOA.
Summary of my Advice
I recommend that you sell your shares and reinvest the funds in the managed funds, which will assist you to get a return between $17,000 and $29,000 a year. Moreover, I recommend that you invest 60% of your superannuation in the managed funds. I carefully choose the categories of the managed funds that you could invest your money. Based on my recommendation, you are likely to get returns of more than $2 million from your capital within ten years. However, if you decide to reinvest your returns with your capital, you will get returns of more than $30 million after tax. I also recommend investing the rest of 40% of your superannuation on government bonds.
I recommend that you take insurance coverage to protect your income and yourself from any loss. If you follow my advice, you will be able to achieve your long-term goal and objectives. The risk associated with my advice is that investment carries risks and investment with higher returns carries more risks.
Section 1: Your Important Information
This section provides information about you, which I use to prepare my advice:
goals and objectives,
Financial information,
Risk profile and associated financial knowledge.
Your Goals & Objectives
Based on the information provided both of you are looking forward for a long and active retirement. Your goal is to be in a good health and look forward to a long and active retirement.
Your goals and objectives when both of you retire in 2011 are to:
Effectively manage your superannuation after your retirement,
Be able to keep Graigs free from debts and out of possible loss of money due to divorce,
Secure high income from the money invested in the shares,
Maintain income of $40,000 a year,
Be able to pass your estates effectively to your children and grandchildren. WILL
Additional goals and objectives are to:
Provide a gift of $5,000 for each of four of your grandchildren (if possible),
Spend the costs of $35,000 to renovate your kitchen,
Be able to travel to Europe for holiday in 2011 at the expected cost of $50,000,
Travel around Australia within the next three years at the expenses of $30,000,
Renovate your kitchen and bathroom ( at expected cost of $35,000),
Go for a three-month holiday in late 2011 to Europe (at the estimated cost of $50,000),
Travel around Australia in the next 2-3 years with a budget of $30,000, and Maintain an emergency account of at least $15,000.
Method to Achieve Your Goal
This advice provides various methods to achieve your goals:
The first step is to sell the following shares that you jointly and individually owned:
Harvey Norman- $7,500
Telstra - $5,500
AXA
$9,500
Westpac - $20,000
By selling these shares, you should be able to raise approximately $42,000. You should use the fund to buy managed funds, which will assist you to earn between $17,174 and $29,053 per year at the rate of between 40% and 68%. Leaving these funds with managed funds for 10 years will make you to earn between $170,000 and $290,000 returns.
The second step is to invest your superannuation in the managed funds at the average rate of returns of 55%. Investing in the managed funds will assist you to achieve yearly returns of $211,145.75 before taxation. However, you will achieve a 10-year return of $2,111,457.50 before tax. If you intend to invest your yearly returns with your capital, your worth will be more than $30 Million without tax.
The next step is to create TTR (Transition to Retirement (TTR) for Craig. You will be able to nominate Graig as beneficiary should anything happen to you. Moreover, you should Will large part of asset your to Graig to protect him from financial loss in the future.
Old Age Pension
Based on the information provided, you will receive the old Age pension upon reaching the age of 65. This will not affect your retirement plan based on the superannuation that you will receive and this will be invested to increase your wealth after the retirement. Based on the estimation of the returns from your investment, you will worth more than $30 Million 10-year after your retirement.
Your financial information
The tables 1 and 2 below provide each of your financial information and the table 3 show your financial information when combining the financial resources together.
Table 1: David Personal Financial Information
Remuneration
Expenses
Gross Salary
$60 000
Gift to 4 Grand Children
$5,000*4
$20 000
Home
$375 000
Settle Craigs Debts
$20 000
Accumulated Annual Long Service
Living Expenses per year
$40 000
Annual Leave
$10 000
Kitchen & Bathroom Renovation
$35 000
Long Service Leave
$75 000
Holiday to Europe
$50 000
Others
Travel Around Australia
$30 000
Redundancy Payment
Emergence Account
$15 000
Holden Commodore
$25 000
Tax on Superannuation
Contents of Home
$25 000
15% * 270000
40500
Share owned
Testra
$5 500
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