Kevin is 22 years old and has recently completed a Bachelor of Commerce at Deakin University. He has decided to put his learnings into practice and wishes to commence his investment journey. He completed two internships during his University years. As a result of his hard work, he secured a role at PricewaterhouseCoopers earning $80 000 per annum after tax. Assume his income will stay the same over the next 3 years.

Kevins parents advised him to put all his money in property due to their own success in the property market. However, Kevin has decided he would like to invest in BOTH shares and property.

1) Explain the benefits of Kevins approach.

Kevin plans to use 25% of his salary after tax as savings for the deposit on his first home. He plans to contribute all the savings to a micro-investing app at the end of every month for the next 3 years. The investment is estimated to earn 8.25% p.a. compounding monthly.

2) How much will Kevin have saved after 3 years?

Show formula, variables, calculations and a concluding statement in your response.

Kevin has planned ahead and identified his dream house purchase in 3 years time. The current value of the house is $580 000. It is expected that the house will increase in value at a rate of 4.5% p.a.

3) Does the amount saved in part (ii) meet the 10% requirement from the bank as a deposit at the end of year 3?

Show formula, variables, calculations and a concluding statement in your response.

4) How much does he need to borrow from the bank at the end of year 3 to buy the house? (Assume Kevin will borrow 90% from the bank)

3 years later at 25 years old, Kevin succeeded with his investment goals. However, his plans have changed due to meeting the love of his life, Ivy. They decided to purchase a property together. Like Kevin, Ivy also invested successfully. Together, they have combined cash of $220 000, and they would like to allocate $130 000 as deposit for their first home, with the rest of the money gradually invested into bonds and shares.

Kevin and Ivy have decided to purchase a house in Epping to live in for $1 300 000.

In order to fund the purchase, Kevin has arranged an 90% loan from the bank, which they will pay off on a monthly basis over a 30-year period. The interest rate on the loan is 2.55% p.a.

5) What will Kevins monthly repayments be on his loan once the property is settled and complete?

Show formula, variables, calculations and a concluding statement in your response.