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) Assess the objective of repaying the car loan within 3 years (assume the interest rate is 8%)

b) Discuss the scope to establish a savings plan to enable Jim to take leave of absence from his job to work overseas as a volunteer in a refugee camp for a period of one year (assume the required savings goal is AUD38,000 and an interest rate on savings of 5%

c) Jim holds a well paid job that offers good career progression. HE  is relatively young and has many years remaining in the workforce until retirement. HIS  salary should steadily increase with time and the amount of surplus money should also increase.

Outline the types of investments she should consider for the allocation of surplus money.

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