As a Wealth Manager, prepare the Financial Plan based on the case background of Gary and Cynthia Lee.

1. Feasibility of the Financial Goals

Case Background :

Gary and Cynthia are 32 & 30-year old respectively and have a son aged 3. Gary has been working as Senior Manager in a major information technology company since his graduation, holding a bachelor degree in Computer Science. He has been working hard with much stress from work and he wants to find more time for hobbies and other personal interests.

After graduating from the university, Cynthia started working as a civil servant but after they had their son 3 years ago, she quitted her job and took a part-time English tutor job, which allowed her to spend more time at home raising their son. They live in a small apartment (still under mortgage) in Kwun Tong which they bought 5 years ago.

They do not seem to have serious financial concerns since Gary expects his job should be quite stable with decent income. They did not seriously consider any financial planning so far. However, Cynthia is concerned about Gary's substantial expenses on his hobbies.Gary, on the other hand, believes that he should have the right to spend his money as long as he provides adequate financial support to the family.

Even they have different views about spending, they can compromise on two issues :

• They take their son's education seriously and plan to save enough money to help pay for his education until he finishes the undergraduate degree (in a local university or overseas university).

• They commit to retire at 60-year old or earlier and estimate, based on market survey, that at least HK$8 million should be ready for their retirement.

Insurance Coverage Gary Cynthia

Life Insurance $1,500,000 $1,500,000

Gary and Cynthia's Financial Needs :

• Completely fund the university education for their son.
• Probably buy a new car for HK$450,000 in about 3 years.
• They want to maintain their current living standards after retirement.
• To establish an investment portfolio and/or other arrangements for their retirement.

Assets and Liabilities for Gary and Cynthia as at December 31, 2021

Liquid Assets HK$

Cash & Checking A/C balance 250,000

Savings A/C balance 600,000

Investments

Mutual Funds 300,000

Local Stocks 500,000

Retirement Plan

Mandatory Provident Fund 350,000

Housing

Apartment at Kwun Tong (market value) 6,500,000

Automobile

Car at market value 100,000

Personal Property

Watches & Jewelry 150,000

Furniture & Appliances 80,000

Current Liabilities

Current Bills (unpaid balance) 0 (Pay their bills on time)

Long-term Liabilities

Mortgage Loan 1,800,000

Other Loans

Personal Loan 80,000

Income & Expenses Data for Gary and Cynthia for the year 2021

Income (annual)

Salary (after tax) - Gary 550,000

Salary (after tax) - Cynthia 150,000

Expenses (annual)

Mortgage payments 100,000

Utilities 24,000

Management Fees 24,000

Property rates and taxes 42,000

Other household expenses 30,000

Food and supplies 80,000

Restaurant Expenses 25,000

Clothing 50,000

Personal care 6,000

Car Loan payments 40,000

Gas, Tolls, Parking 65,000

Repairs 10,000

Entertainment and Vacation 40,000

Medical Expenses 15,000

Insurance - Life, automobile 36,000

Education expenses 40,000