You have just met with new clients, Georgio Mylona, age 28, and Amelia Lopez, age 27. Georgio and Amelia have been a couple for four years and living together for three years. They are not interested in getting married, but are considering their options whether to purchase a property together once they have sufficient resources to do so. The couple live in a waterside rental apartment, and are not inclined to move out of the city area. They both walk to work each day and enjoy the city lifestyle. Amelia and Georgio do not see children as part of their plans, at least not any time soon. They are both solicitors and met a few years ago when they were both working for the same firm. Georgio is still with the employer, but Amelia is now an in-house lawyer at an insurance company. Georgio earns an income of $80,000 p.a. plus the 10% superannuation guarantee (SG). Amelia earns $87,000 p.a. plus the 10% SG. Georgio has a share portfolio that he more or less put together himself, and has never been reviewed professionally. He purchased a variety of shares in different companies in November 2014 and has left the portfolio untouched since. Georgio and Amelia want to save money towards potentially purchasing a house in about five to seven years to have that option. They also want to invest more into the stock market because they believe that is their best chance at beating the returns of the property market, or at least keeping pace with it. They are not completely committed to purchasing a home, as they love their current lifestyle and are not sure buying is practical. Amelia has accumulated cash that she would like to use to start her own portfolio. Although the couple share all expenses and income, they would prefer to keep their own portfolios of shares, as they have slightly different attitudes to investing. Amelia's father has agreed to match her savings if she starts a share portfolio with the money she has in her cash management trust (CMT). Tables 1-4 detail the income and expenses, assets and insurances held by Georgio and Amelia. + Table 1: Georgio's and Amelia's income and expenses for 2021/22 Income and Georgio Amelia Notes expenses Salary $82,000 $87,000 Franked dividends $1,441 $0 Franking $617 $0 Georgio's shares Fully franked (imputation) credits Interest $37 $738 CMT and savings account Assessable income $84,095 $87,738 Deductible expenses $2,300 $2,500 Donations and income protection Taxable income $81,795 $85,238 Tax on taxable $17,050 $18,169 2021/22 tax rates income Medicare levy $1,636 $1,705 Medicare levy $0 $0 None surcharge Franking rebate $617 $0 Total tax $18,069* $19,874* Income after tax $65,409 $67,864 Includes interest and dividends Total living $56,125 $56,125 All cost of living expenses Net cash flow $9,284 $11,739 Income after tax and Surplus $7,427 $9,391 expenses Savings capacity (80%) *Ignores other offsets/rebates + Table 2: Georgio's and Amelia's assets Asset Owner Value Loan Principal residence $0 $0 Contents Joint $85,000 $0 Car 2017 Toyota Joint $39,000 $0 Camry Savings account Joint $5,000 $0 CMT Amelia $20,000 | | Share Portfolio Georgio $73,470 $0 XYZ Georgio $50,000 $0 Superannuation Fund $0 Details No house, are renting Joint names Fully paid off and only one car Everyday savings account earning 1.50% Earning 3.5% See table 3 -Invested in a retail fund, balanced option - earns 6% p.a. net of fees and taxes -Beneficiaries and binding nominations specified -The fund accepts salary sacrifice -No untaxed elements or tax-free components - Management expense ratio (MER) of 1.0% p.a. for the balanced option - Death and total and permanent disability (TPD) cover held -Invested in an accumulation fund, high- growth option earns 7% p.a. net of fees and taxes -The fund only has defensive, balanced or high-growth options available -No untaxed elements or tax-free components -MER of 1.3% p.a. for the balanced option -Death and TPD cover held DBC Superannuation Fund Amelia $60,000 $0 Table 3: Georgio's share portfolio Company Number Current price Purchase price Current value of shares Boral Limited 860 $5.94 $5.80 $5,108 Commonwealth Bank 110 $100.75 $39.95 $11,083 CSL Limited 110 $300.97 $23.35 $33,107 Lend Lease Corp 590 11.20 $11.25 $6,608 National Australia 170 $28.19 $29.80 $4,792 Bank Rio Tinto Limited 70 $108.10 $57.00 $7,567 Telstra Corp 590 $3.90 $3.50 $2,301 Westfield Group 330 $8.80 $19.40 $2,904 Total Value 2830 $73,470 Georgio purchased the initial portfolio in 2014, with the same number of shares in each holding as he has now. He has taken dividends as income each year and not reinvested. He has not purchased any additional shares since 2014. Table 4: Georgio and Amelia's insurances Policy Life insured Owner Cover Premium Details (p.a.) Death and Georgio Super $500,000 $519 Life/TPD (TPD) stepped Death and Amelia Super $500,000 $428 Life/TPD (TPD) stepped Income Georgio Self $5,599 $667 Stepped to age protection 65,30 day wait Income Amelia Self $5,940 $1.017 Stepped to age protection 65,30 day wait Contents n/a Joint $85,000 $700 Indemnity policy for Motor n/a Joint $39,000 $1,700 vehicle contents cover at market value Comprehensive Private Couple Joint n/a $2,600 Top hospital health policy and extras insurance cover