Your client, Paul, is a social worker. He lives with his wife in a village in New Territories. He has an outstanding fixed mortgage payment of $18,000 per month for 4 years. The interest rate is fixed at 6.2% p.a. He wishes to advance his mortgage payment by 2 years by paying a lump sum.

Paul and his wife, Pauline have a 12-year old daughter, Polly. They wish to send her daughter to a UK university for 4-year study in 6 years time. It is expected to cost $310,000 for every 6-month in present value terms.

Paul intends to make an initial contribution of $0.7m. After that, he believes he can make $2,900 regular contribution for every 6-month while he is paying the mortgage. This contribution is expected to grow with an inflation rate of 3.1%. After repayment his mortgage in 2 years time, he believes he can make an extra contribution of $8,300 per month (or $49,800 for every 6-month). Again, this contribution is expected to grow with inflation rate.

Paul also plans to retire 16 years from now and wants to have 2.3m (in present value term) for his retirement when he retires.

Paul can only tolerate a maximum loss of 24% for his investment.

1)Draft IPS

[Complete the sections on Investment Goal and Investment Objective (e.g. IRR calculation for your client)]