Jim:

• Jim is a retired doctor. He was married for 25 years until his wife died about two years ago. He now lives alone. Financially, Jim is comfortable in retirement largely as a result of following a financial plan as a married couple for many years.

• Jim is active, in good health and helps out as a volunteer in several community activities.

• Jim is interested in scuba diving and likes to visit famous reefs and shipwrecks. Many of these sites are overseas. Ideally, he would like to undertake an overseas holiday each year.

• Jim is conservative by nature even more so since retiring and losing his wife. He has no interest in risky investments

Question:

1a) Discuss the key factors that JIM should take into consideration for his financial plan and the allocation of savings. In your response make specfic references to the case information.

b) Discuss how JIM can use insurance to protect his home against key risks.

C) JIM is considering purchasing some shares in the company he works for. The company is listed on ASX and has a current share price of AUD3.50. Earnings in 20X2 were AUD0.35 per share and in 20X1 were AUD0.30 per share. The average PE (based upon projected earnings for 20X3) for similar companies is 11.5.

Review this potential investment by JIM d and prepare a recommendation.

Client Name Jim Age Status 71 Widower (single), home owner Dependents Nil Occupation Retired Doctor Net Income AUD85,000 pa total from retirement (after super fund and investment portfolio of bonds and after and shares tax) Expenses AUD55,000 pa (living and financial) Major assets Cash at bank AUD30,000 Superannuation AUD1.8 million Home AUD1.5 million Investment portfolio AUD250,000 Car AUD50,000 Major Nil liabilities Major Continue self funded retirement and financial undertake one overseas holiday each goals year (approx cost AUD30,000 per holiday additional to normal expenses) Client Name Jim Age Status 71 Widower (single), home owner Dependents Nil Occupation Retired Doctor Net Income AUD85,000 pa total from retirement (after super fund and investment portfolio of bonds and after and shares tax) Expenses AUD55,000 pa (living and financial) Major assets Cash at bank AUD30,000 Superannuation AUD1.8 million Home AUD1.5 million Investment portfolio AUD250,000 Car AUD50,000 Major Nil liabilities Major Continue self funded retirement and financial undertake one overseas holiday each goals year (approx cost AUD30,000 per holiday additional to normal expenses)