personalfinancialplanningreport

1、 Personal Financial Planning Report NameStudent IDLiu Zhifei3830810Wang Yifei3830820Wang Yuting3830819Zhu Wenbo 3830930TABLE OF CONTENTSChapter 1 - Introduction31.1 Financial Planning Strategy4Chapter 2 Personal Information and Financial Position62.1 Family's Information62.2 Clients Financial Po

2、sition62.2.1 Personal Cash Flow Statement62.2.2 Personal Balance Sheet82.3 Risk tolerances and Attitudes toward risk (163)8Chapter 3 - Identification of Financial Goals and Problems113.1 Identification of Financial Problems (74)113.2 Identification of Financial Goals (104)11Chapter 4 - Diagnostic An

3、alysis of Family's Financial Position124.1 Financial Ratios Analysis (140)124.2 Analysis of Financial Structure (59)124.2.1 Structure of Earnings124.2.2 Structure of Assets134.3 SWOT Analysis (210)14Chapter 5 - Recommendations165.1 Financial Assumptions (170)165.1.1 Inflation Rate165.1.2 Interes

4、t Rate (67)175.1.3 Nationwide House Price Index (54)175.2 Financial Advise (265)185.2.1 Comparison of financial tools185.2.2 Analysis of Asset Redistribution185.2.3 Recommendations of Asset Redistribution205.2.4 Recommendations of Family Insurance215.2.5 Recommendations of House Purchasing Plan21Cha

5、pter 1 - IntroductionFinancial Planning will help achieve Miss Zhang's desirable financial objectives by the means of appropriate management of her financial resources and identify the priorities on each of her goals. To help you realize her aims, we assess her present financial position, identi

6、fy her goals at different stages of her lifetime and then determine the achievable goals and the optimal means to achieve them. The financial planning model aimed at identifying her status quota and predict her future situations. All the analysis is according to the data provided in the Financial Pa

7、nning Questionnaire completed on 04-27-2011. Relevant tables and charts are given for facilitating us to understand and clarify what is going on. When we organize her financial plan, taking the fundamental aspects into account firstly, that is her personal information, financial information and fina

8、ncial planning objectives. In the second place, we move on to address more specific and complex issue based on the basic elements. Based on the analysis combing with her life and occupation characteristics, we put forward recommendations in terms of consumption and cash flow plan, investment and ris

9、k management plan, retirement plan which as a whole are designed to make approachable to the desirable aims and objectives. We deem that all these advises are matching your current financial needs, achievable projection and priorities and they are also so flexible that we can make timely adjustment

10、to suit any future changes in your personal and financial circumstances which we will trace and pay ongoing attention to as well as check regularly. We make a series of assumption when doing ther. But actually projections based on these are quite sensitive to them. Even a little change in the econom

11、ic condition will impose a significant influence on her projected financial situation in the coming years. Thus, such a change in the real situation will turn her actual financial outcome to be even radically different from the projected one. For ther reason, we advise that her situation should be r

12、evised and corrected on an annual basis. 1.1 Financial Planning Strategy Given your family structure and your risk portfolio, we think her financial planning should be based on a long-run consideration and the principle of financial planning should be conservative. According to this, we recommend as

13、 followings: 1. Career SimulationThrough the valid estimation of the key data, this simulation can ensure that the financial objectives of the clients are achievable and analyse its effects and correlated risks. 2. Analysis of present financial position Identify the present financial circumstances o

14、f the client's based on the analysis of personal cash flow statement and personal balance sheet as well as the consideration of various financial ratios to utilize resources effectively and control risks. 3. Analysis of the client's financial goals and the nature of risksIdentify the client&

15、#39;s risk portfolio and expectation according to a series of relevant tests. 4. Assets disposition Perform effective assets disposition according to the expected return to achieve financial objectives along with control risks identified effectively. 5. Property purchasing planMake a valid estimatio

16、n and comprehensive analysis of the clients' repayment capacity, cash flow and financial position. In the mean while, provide the optimal solution in terms of loans and property purchasing plan. 6. Home Protection SchemeThe scheme (HPS) is a mortgage-reducing insurance scheme to help insured mem

17、bers and their families pay off outstanding housing loans in the case of permanent incapacity of repayment given the correlated risk between the life expenditure and assets & liabilities.7. Retirement and pension securitySimulate the cash flow position of the client's lifetime and have an ov

18、erview of her income and expenditure to arrange the wealth properly after her retirement and guarantee her sufficient cash flow and life quality. 8. Review, revise and maintain the personal financial planGiven the client's circumstance, we recommend that the plan be revise per annual. The date s

19、hould be April of 2012 unless there appears some significant changes. Chapter 2 Personal Information and Financial Position 2.1 Family's InformationFamily MemberMrs. Wu (client)Mr. Wu (husband)Age4550OccupationSCMITChildren/dependentsNone None RetirementIn 5 yearsThis yearOther informationBoth e

20、njoy good health and non-smokers; both are nor insured for their home contents, cars and medical costs. Never thought about their superannuation fund as they have continuance income after retirement2.2 Clients Financial Position2.2.1 Personal Cash Flow Statement Personal Cash Flow Statement (Per Mon

21、th)IncomeExpensesPersonal income25 000Loans and credit card repayments0Husband's income30 000Domestic expenditures 10 000Interest and managed fund distribution5 000Medical expenses1 000Property Rent1 000Personal contribution to superannuation0Total61 000Total11 000Balance available per month50 0

22、00Personal Cash Flow Statement (Per Annual)Year-end bonus110 000Domestic expenditures120 000Interest and managed fund distribution60 000Loans and credit card repayments0Income660 000Medical expenses12 000Property Rent12 000Entertainment, holidays and miscellaneous expense5 000Automobile insurance 1

23、000Others0Other expenses30 000Total842 000Total168 000Balance available from previous year674 0002.2.2 Personal Balance Sheet AssetsLiabilitiesCash and at-call deposit100000Home mortagage0Fixed deposit700000Car loan0Shares, bonds and funds5500000Credit cards0Home and contents3500000（3 sets）Others 0C

24、ars99800Total assets9899800Total liabilities0Equity98998002.3 Risk tolerances and Attitudes toward risk (163)Risk tolerances is the ability to perform risky investment and violate the fluctuation of prices. It is always affected by age, employment status, investment experiences, investment knowledge

25、 and such that. According to the outcome of our test (62 marks), we think that they can bear risks to some degrees. They have stable income sources and little economic burden because of no dependents or mortgages. In the aspect of investment, they got intermediate marks, which means that they have m

26、astered the fundamental of investments. In general, we classify them to the category of risk indefference people. Attitude to risks refers to the psychological changes when clients are faced with the losses of principal. In this aspect, our client only got 48 marks in the test. Because of lack of pr

27、ofessional knowledge about investment and insufficient experiences as well as the weak personal psychological endurance, the score is a little weak, which means that their investment psychologies are sensitive to the result of the investment. Figure 1. Scoring table of risk tolerances Age 10marks8ma

28、rks6marks4marks2marksScores of clients45Total scores: 50marks; people under 25: 50marks; for 1 year older, 1marks less; people over 75: 0marks30Employment status Public officersWage ownerCommission earnerSelf-employedemployed8DependentsSingledouble-income family without childrendouble-income family

29、with childrensingle-income family without childrensingle-income family with children and parents8Property Real estateMain residence without Home mortagage Home mortagage<50Home mortagage>50No residence8Investment experiencesOver 10years610years25yearsWithin one yearnone4Investments knowledgepr

30、ofessionalSystematic knowledgeBasic knowledgeA littlenil4Total scores62Figure 2. Scoring table of attitude to risksRisk tolerance %10 marks8 marks6 marks4 marks2 marksScores of clients10No tolerance to any loss: 0 mark; per 1% increase; two marks increase; loss tolerance>25: 50 marks20The highest

31、 prioritiesShort- term marginsLong-term gainsCash earnings p.a.Anti-inflationReserve for investment & pricipal8Reaction to lossesNo reactions to stop-limitEx post stop-limitDamaged and kept partlyWait for upturnRedeeming investment4Losses psycologyLearn experiencesAs usualSlight affective labili

32、tySignificant affective labilityCritical affective lability4The most vital featureProfitabilityProceeds and growth ProceedsLiquiditySafety 6Risk control toolsNone Futures Shares Foreign exchangeReal estate6Total scores48Chapter 3 - Identification of Financial Goals and Problems3.1 Identification of

33、Financial Problems (74)There is a few financial problems listed as below: l How to handle present real estate and complete the purchasing plan;l How to make the investment to its advantages to meet the investment needs;l How to diversify the investment portfolio to reduce the potential risks;l How t

34、o invest in life and medical insurance to prepare for future accidents.l How to accumulate a certain assets via contribution to the superannuation to provide guarantee after their retirement.可以加点？3.2 Identification of Financial Goals (104)The couple's short term and medium-term financial objecti

35、ves are summarized as: establish a safe and stable investment portfolio to ensure the consumption level and lifestyle unchanged, which are detailed as below: Short- term Objectives:l Purchase real estate in the square of 120-150 m2 in Beijing in the next year.l Handle the real estate in Shanghai whi

36、ch is valued at RMB 3.5 million Long- term Objectives:l Purchase social health insurance for the whole family l Maintain current living standard as well as increase the value of the present property by diversified investment. l Contribute the superannuation fund to accumulate a certain amounts of fu

37、nds after their retirement. Chapter 4 - Diagnostic Analysis of Family's Financial Position4.1 Financial Ratios Analysis (140)We will utilize four financial rations to evaluate the family's own set of financial circumstances, they are respectively net worth ratio, current asset ratio, savings

38、 ratio.Net Worth RatioNet worth ratio = net worth/total assets *100 = 0That is, this family owns 100% of the assets that they are acquired without any liabilities. That is, they do not have any repayment obligations. Current Assets RatioCurrent assets ratio = curretn asset/total assets = 560 0000/98

39、99 800=56%This ratio represents that half of their assets are in the form of cash or can be converted into cash within 12 months. It also shows that the liquidity of their assets is fine. Savings RatioSavings ratio = Savings/net income = 674 000/ 842 000= 0.8 = 80%The ratio for the family after tax

40、is calculated as 80%. It shows that the family have a good investment potential. 4.2 Analysis of Financial Structure (59)4.2.1 Structure of Earnings Currently, their income comprises 3 parts mainly: income (80%), year-end bonus (13%) and Interest and managed fund distribution (7%).4.2.2 Structure of

41、 AssetsFor the most part, the assets of the family are: current asset, including cash and current deposit, accounting for 56% of the total assets; financial assets, at 1%; non-current, taking 56%, which should also be included in current asset.From another perspective, the assets can be divided into

42、 3 categories according to the profitability of the assets, that is fixed-interest product, shares, bond and funds, investment real estate and others. The proportion they account for is depicted in the figure below: 4.3 SWOT Analysis (210)We give a detailed analysis of the basic conditions of the fa

43、mily through SWOT analysis, combining with the financial ratios and financial structure analysis, which is listed as below: SWOT analysis of the family financial powitionS（Strength）Ø No liabilitiesØ Abundant real estateØ Considerable income W（Weakness）Ø Low liquidity assetsØ

44、 Slight price volatility and inability of anti inflation Ø Fewer investment classesO（Oppotunities）Ø Higher life quality Ø Property investmentT（Threats）Ø Lack of home guarantee measuresØ Need comprehensive superannuation plan resulting from no children Based on the analysis l

45、isted above, we assert that our clients are moderately conservative investors with a satisfactory financial condition. This mean that they accept stability in both income and capital returns, they seek for more capital appreciation than just income stream, and a long-tern investment time frame is pr

46、eferable to them. According to the information acquired from her family's cash flow statement and balance sheet, we judge that our client's financial circumstance is relatively ideal with all the ratios superior to the empirical value we searched via the Internet. The financial superiorities

47、 are mainly presented in the four aspects listed below: 1. The family of two is in the stage of pre-retirement without any liabilities and relevant repayment burdens. 2. They do not have the additional economic burden to purchase marriage housing for their children of marriageable age.3. They both o

48、wn stable and considerable income. Besides, the savings ratio which compares the level of savings to total income after tax is relatively high. 4. Current assets ratios is so high that there won't appear a liquidity problem, at 56%. Moreover, the investment ratio of the family remains at a highe

49、r steady-state level, which can achieve capital gain in short run. Chapter 5 - Recommendations 5.1 Financial Assumptions (170)Given that the couple will retire in recent years, we set the span of the financial planning is from April, 2011 to April 2015. Due to incomplete basic information and uncert

50、ainty of the future economic environment and so on, we put forward reasonable and justifiable assumptions that are referred to as: 5.1.1 Inflation RateChina's CPI, a main gauge of inflation, is expected to remain high in the next few quarters of the future 5 years. The index of the 1st and 2nd q

51、uarter are predicted to rise by about 5% year-on-year, but a slight fall is expected by the national financial planner. In the mean while, the GDP in 2011 is expected to grow 9.6 percent in 2011, which was moderated from 10.3 percent growth in 2010 as policy tightening slows investment. Though the i

52、nflation pressure from overseas is still strong, the price hike pressure from food has peaked, which means that the inflation rate may fall slightly. Thus, we expect the average inflation rate in the long-term will be 5%. 5.1.2 Interest Rate (67)Since October 2010, The People's Bank of China, th

53、e central bank has increased the benchmark interest rate for four times, at 3.25% for deposit and 6.31% for savings and loans. Though the index is expected to rise further, but the inflation will be controlled through macro-control. Therefore, we expect that the inflation rate will not violate large

54、ly. The projected investment earnings will remain level as a whole. 5.1.3 Nationwide House Price Index (54)Land prices and house prices in major cities of China rose slightly in the first quarter in 2011, but the government has adopted measures to cool the runaway property market. Because the countr

55、y's strict measures to rein in property markets had begun to take effect, the house prices may increase at a slower pace. 5.2 Financial Advise (265)5.2.1 Comparison of financial toolsAccording to the historical data, the rating scale of several common financial tools in terns of security, earnin

56、gs and liquidity is illustrated as below: Financial toolsSecurity Earnings liquidityBank deposit*National bond*Bond*Share*Foreign exchange*Property*Traditional insurance*Gold markets *5.2.2 Analysis of Asset Redistribution Among the family's interest- earnings asset, fixed interest type of products accounts for 7%, equity asset takes about 56% and the investment real estate - 35%. We can figure out that the family's interest-earning assets are mainly concentrated on the financial product of