Luke and Daisy’s Financial Plan

Title: Luke and Daisy’s Financial Plan

Word Count: 3282 words

Contents

Introduction        

Part A        

Assumption:        

Objectives for Luke and Daisy        

The couple’s current financial position        

Income and expenditure        

Likely changes in the couple’s financial position        

2019 Luke: 57; Daisy: 50        

2020 Luke: 58; Daisy: 51        

2022 Luke: 60; Daisy: 53        

2026 Luke: 61; Daisy: 57        

2027 Luke: 65; Daisy: 58        

2029 Luke: 67; Daisy: 60        

2013 Luke: 69; Daisy: 62        

2036 Luke: 74; Daisy: 67        

The couple’s financial position at retirement:        

Part B        

Part C        

Capital Gain Tax Planning        

Inheritance Tax Planning        

Estate planning        

Key issues without making wills        

Advice for estate planning        

Part D        

Luke’s investment portfolio:        

Objectives        

Portfolio Details        

Risks behind the investment portfolio        

Daisy’s investment portfolio        

Objectives:        

Assumption:        

The potential risk in this portfolio:        

Tax minimisation:        

Summary        

Part E        

Assumption:        

Roscoe’s current financial position:        

Recommendation        

Appendix 1        

Appendix 2        

Money for travelling on Daisy’ 50th birthday        

Money for emergency funds        

Money for Roscoe’s financial aid, travelling and care costs        

Appendix 3        

Money for paying the university fee and purchasing property        

Introduction

This report is aiming to establish a financial plan for Luke and Daisy, which is divided into five parts, namely likely changes in their financial position before retirement, advice on options from pension reform, capital gain tax, inheritance tax and estate planning, recommended investment portfolio and affordability of the property purchase for Roscoe.

Part A

In order to establish a thorough financial plan, reasonable assumptions and realistic objectives are quite essential.

Assumption:

Luke’s mother dies at her 81 as she is a smoker whose life expectancy is assumed shorter than non-smokers and she has been diagnosed with high blood pressure.

Another 8 years is predicted for Luke’s father to live given the reason that he lives in a relatively healthy lifestyle.

Daisy’s father will die after 15 years, whereas his mother will die after 17 years as they are both in reasonable health.

Luke’s retirement age will be 60 as he is not passionate on working. Therefore, I assume that his retirement age will be earlier than average retirement age in the UK.

Daisy retires at 67, changing from full-time job to part time job when Luke is 60.

Objectives for Luke and Daisy

Mutual objectives:

Short term objectives: Payoff the credit card liability; Payoff the car loan

Long term objectives: Save for potential care costs after retirement; plan for the wealth distribution for Roscoe and Alice; invest for holiday every two years after retirement

Luke’s objectives:

Short term objective: plan to invest for the trip to Australia and provide financial aid to Roscoe.

Medium term: provide financial aid for Roscoe

Daisy’s medium term objectives: Invest for paying the university fee and help Alice purchase a property.

The couple’s current financial position

Income and expenditure

The couple is at their maturity level lifetime with relatively high income. According to the case study, the couple’s expenditure can be nearly covered by their net income. However, insufficient savings cannot supplement emergency.

Table 1: Current Assets and Liabilities

Advice: Considering that they have £4500 on their credit card, it should be paid off using the gains from the sold flat otherwise it will attract a higher interest rate in the future, (King& Carey, 2014).

I recommend renting out a room to increase extra income and put some of it to easy access account as emergency funds, with total amount £8000 to cover their three-month life expenditure. In order to prevent loss from illness and injury of losing jobs, I suggest the couple buy income protection insurance at the present, which will increase their expenditure right now but will be beneficial to them if either of them cannot work.