You are a fully qualified financial advisor. You have a long-standing client Kate Spruce who has sent you an email asking your advice. Kate is 29 and a full-time nurse. She has one child a 6-year-old boy in primary school. Kate lives with her son in a rented 2-bedroom apartment in their small town. Kate has no romantic partner or roommates. He parents died last years and left her $200,000 as an inheritance. You advised she invest this in a term deposit as her top priority is buying a home for her and her son. She has is hoping to buy a house in early 2025 which is when the term deposit ends. Kate budgets well and has a spare $500 per month which she saves. Her savings account has $12,000. Her only other investment is her super which is invested in line with her balances risk profile and has a balance of $150,000.

Kates email reads:

Dear {your name},

I know we dont have our next scheduled meeting for a few months, but something has come up recently that I wanted to ask you about. I was at my friend Preethis house for a BBQ on the weekend and her mate Sami told us about a great opportunity. Sami is a freelance economist who does commodities trading from home. He says he can make me a 20% per year rate of return if I invest through him. He says that he only takes on a limited number of clients as he doesnt need to work due to being independently wealthy but would accept me because Im friends with Preethi! Preethi has all her super invested with Sami and says hes been great! Problem is Sami needs me to transfer the money to him by the end of the week, $100,000 minimum. I was thinking I could use the money from the term deposit. What do you think?

Thanks,

Kate

Providing Kate with the advice on her situation. Should she close the term deposit and send the money to Sami? Why or why not? Is there something else she should do?