Question 1: Case study

You are a financial adviser and the following information is an extract of data you gathered as part of fact finding during an initial client consultation for married couple Janet and Steven Blake.Janet works as a Teacher and Steven works as town planner at the local government.The have two children who are aged 12 and 14.

• Janet and Steven would like to know how much money they will receive after paying tax and expenses for the year ended 30^th June 2018. They would like advice on how to reduce their tax liability in the future.
• The Blake's have diversified their investments by investing equally in a bank savings account, a fund and some Macquarie Group Ltd Shares.Their risk profile is equivalent to that of a growth investor.They have come to you understand how they should invest in the future.
• The Blake's life goal has been to buy a property in the country and live the quiet life 10 years from now.They need to save a $200,000 deposit to achieve this dream.They have $60,000 invested now and they estimate they can save $5000 p.a. for 5 years and then $10,000 p.a. for the 5 years following this.They have come to you see if they can achieve this goal.

Income for year ended 30^th June 2018:

Income type

Amount

Gross Salary- Janet

$70,000

Gross Salary- Steven

$54,000

Vanguard Bond Fund- Distribution 3.85% (Janet)

$770

NAB Savings Account Janet- Interest 2.3%- Janet

$230

Macquarie Group Limited- Dividend $2.05 per share- Steven

$410

(partial franking credit $80)

Estimated annual expenses

Item

Amount

Rent (650 per week)..........................................

33,800

Electricity/Water/Gas ........................................

3,000

Telephone/Mobile ............................................

2,200

Pay television/Internet .......................................

1,100

Insurance -contents ..................................

1,200

Insurance - car...............................................

3,000

Credit cards repayment ($500 a month for 12 months).

6,000

Car loans repayment ($8000 a year for 5 year term).....

8,000

Petrol/maintenance ...........................................

6,000

Car registration ................................................

800

Public transport ...............................................

2,800

Other expenses

Food ............................................................

12,500

Clothing/Haircuts/Beauty ...................................

5,500

Medical/Dental ................................................

2,500

Entertainment/Dinners .......................................

6,000

Teacher Union Membership (Janet)..................................

1,000

Gifts - Birthdays/Christmas .................................

3,000

Total ...........................................................

98,400

Current Assets and Liabilities

Assets (Ownership)

Current valuation

$

Liability (Ownership)

Current valuation $

Home Contents (Joint)

20,000

Credit cards (Joint)

Includes the annualinterest cost

6,000

Car (Joint)

35,000

Car loan (Joint)

5 year term at 12%

30,000

Bank Account:

Cheque Account (Joint)

8,000

Investments:

NAB savings Account (Janet)

Vanguard Bond Fund (Janet)

Macquarie Group Ltd Shares (Steven)

20,000

20,000

20,000

Required:

A.Calculate Janet's and Steven's after-tax income and savings ratio for the year ended June 2018. Explain one way in which Steven and Janet could reduce their tax liability and show the effect this strategy would have.

B.Review the Blake's investment portfolio and explain whether they are diversified adequately. Consider both investments across different asset classes and investments within classes. Make two recommendations on how they should change their portfolio for future investments and justify these recommendations.

C.Calculate the future value of the investment portfolio 10 years from now assuming it will earn a 5% p.a. after tax. In this calculation you should include the FV of the current investments and the FV of the contributions that Blake's estimate that they make over the next 10 years.Assume that contributions are made at the end of the year and that the first contribution will be made 365 days from now.Finally, explain one strategy that Janet and Steven could reach their goal more quickly and show the influence that this will have.

need A B and C answered so i can have a go at them myself