CASE STUDY

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CASE STUDY ON PERSONAL FINANCIAL PLANNING ABSTRACT The case is ideal for an undergraduate finance course with an emphasis on personal financial planning. This case connects the myriad of personal financial to which families are exposed in the due course of their smooth running These include personal financial planning managing liquidity. personal financing, tax planning, managing insurance and risk, investment planning. retirement and estate planning In addition, the case incorporates other critical elements important to personal finance management, such as capital redeeming and asset securitization. The case also includes a thorough family financial strategy analysis with certain goals and liabilities. I CASE DESCRIPTION In today's scenario large number of families incurs losses because of the lack of existence of a financial plan. This case is about a family which constitutes of 5 members and is presided by a person named Mr, ART MAN. The family has 7 real life desires which need to be fulfilled by manipulating and using the available assets and anticipated income out of the interest rates on this property he possess and also the regular income flow of Mr, Art and his wife. This case studies the financial problem in MALAYSIA. All the solution of the case is solved keeping in mind the interest rate of Malaysia. The description of the desires and the personal property possessions has been detailed in the further part of the report.\fII CASE GUIDELINESS The case includes the following seven parts: Part 1- Cash Flow and Net-worth Statement Part 2 - Loan Repayment and amortisation Part 3- Education Provision for Mawar Part 4- Insurance / Takaful Part 5- Taxation (more at advising) Part 6- Investment (FV/PV) Part 7- Retirement Plan/ Estate Planning of Mr. Art and Rosie 2.1 Case Data/Information Mr. Art and Rosie are working couple, where Mr. Art is a doctor (Chest specialist) attached to private hospital and Rosie works in accounts department in an IT firm. The family comprises of 5 members, but Mr. Art and rosie have 1 school going kid -Mawar and Mr, Art parents - Wak Lam and Nik Sephia are staying with them. NO NAME AGE RELATIONSHIP HEALTH HISTORY Mr ART MAN 36 Self Normal MS ROSIE 30 Wife Normal 3 WAK LAM 68 Father Hypertension (BP High) 4 NIK SEPIA 60 Mother Thyroid + High BP 5 MAWAR Daughter Normal Financial Information: Their cash flowset net worth is given below (husband And wife) MONTHLY (in RM) YEARLY (in RM) Inflows (including EPF, 18.500 222.500 bonus) Rental ??? ???7 Outflows 15,000 180,000 Household & lifestyle 4,000 48.000 expenditure Maid 500 6.000\f2.6 Retirement and Estate Planning Mr Art and Mo Rose are happy with their working life and intended to retire only after Me Rose turn to 55 years old. They wish to maintain their current lifestyles after their retirement and estimated that 60% of their last drawn salary would be enough for their retirement. They have expressed that lifestyles after retirement shall be inclusive of travelling to their favourite destination around the world. They asked you to provide them with the retirement fund requirement that is able to sustain them for 20 years. Both of them has PART A (1) You have been asked to calculate the amount sufficient to provide for the family's current expenses (minus car hire purchase and home mortgage loan) until his daughter Mawar completes study at the university should any misfortune were to happen to Mr Art. No cash value from the Takaful scheme has been recorded. Including the investment opportunity and tax planning. They also realized that they need plan on their estate planning and sought your advices. The couples also indicate their willingness to share the matrimonial asset at a ratio of 50:50 on all the asset when one of them dies. Assumptions 1) Inflation rate is at 3% per annum. 2) Future EPF dividends are expected at 5% 5 year. EPF withdrawal at the age of 50: one third of EPF balance or Account II. The rate of return on equity investment is 8%, REIT at 6% and savings account at 3%. While unit trust is 8% and Tabung Haji is 6%. For unspecified investments, weighted returns will be used in the calculation. All return is reinvested. Income tax as at 2019 rate. 7) No dividends are expected from stock investments held and the market value is not expected to change substantially in the near term. All cars depreciate in value at an annual rate of 15%. 9) Life expectancy for male and female: 80 years, 10) Tabung Haji account is dedicated for Hajj planning only. 11) Zakat calculation is based on Lembaga Zakat Selangor for the year 2019. Based on LZS, for financial assets, nisab for 2019 is RM 13,490 12) Post retirement return on investment is expected to be at 6%. 13) Investment in Bitcoin has been giving 20% average return annually, gold bar 5% average return per annum. 14) Bank Kerjasama Rakyat Malaysia has been declaring an annual dividend of 15% in average. () Income tax as at 2020 rate