Financial Plan for Hkd

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Gather client data and determine financial goals with client

Existing portfolio

Personal Balance Sheet

HKD

HKD

Asset

Cash

30,000

Stock

20,000

Investment linked insurance (cash value)

30,000

MPF

40,000

Total

110,000

Liabilities

Nil

Nil

Net Assets

110,000

The existing portfolio of Crystal was not complicated. Only consist of cash (in HK dollar), stock, investment linked insurance and MPF.

For the cash part, it was remained in her saving account. While the stocks are consisted of 4 non-major stocks which she bought in for specilation but lost about 60%. For the investment linked insurance, it was a 15 years plan with monthly payment of $1,000. This was a plan she subsribed through her friend who worked as an insurance agent three years ago. The composition of funds had been changed a few times that Crystal did not remember the details and now should at around 17% loss. Currently there was one Chinese equity inside and Crystal mentioned she preferred to leave it like this. While for the MPF, it was at about 33% loss now and was composed of a balanced fund.

Income and Expense Analysis

Amt (HKD)

Amt (HKD)

Income

Full-time secretary

10,500

Part-time beer promoter

5,000

Total

15,500

Expenses Item

Utilities

(300)

Home telephone & Internet

(150)

Mobile telephone

(300)

Groceries

(800)

Dining out

(2,500)

Entertainment

(1,500)

Clothing

(2,000)

Transportation

(600)

Insurance Plan

(1,000)

Total

(9,150)

Disposable Income

6,350

With analysis of Crystal’s existing expense, there was a higher proportion on non-essential expenses. E.g. Clothing, dining out and Entertainment. In order to secure a more adequate future of fund. I recommended to consider cutting down some of her non-essential expenses.

After Crystal provided her financial position information to me. I asked her whether she had other financial goals wanted to achieve. She mentioned that she planned to accumulate some money for marriage and she also had a wish to start her own business of running a Darts Dojo for people who interested in darts can play under a non-alcoholic drinking place. Nevertheless, securing her retirement life would also be an important financial objective to her and she expected to have about HKD 10,000 equivalent to existing price level for spending on her retirement

For preparation of her marriage budget, she mentioned that she required HKD 200,000 in 4 years time. Although part of this amount would be prepared with her boyfriend, she would try to save as much as she could. For calculation of the required amount in consideration of an assumed inflation rate of 4%, the amount required for marraige budget is about HKD 233,971.

While for her plan of starting a Dart Dojo business, she would require an initial capital of HKD 150,000. She expected to run the business in 4 years time and she might probably quit her existing job and fully devote on the business. The expected monthly income of the Darts Dojo is about HKD 30,000.

For calculation of the required amount in consideration of an assumed inflation rate of 4%, the amount required for starting darts dojo business would be HKD 175,479.

Retirement fund required is calculated under the below assumptions:

Retirement start at age 60

Post retirement life is 25 years

Post retirement monthly expense is HKD 10,000

Expected inflation is 4%

The amount required upon retirement is HKD 5,501,423 if expected return is 10%.

fund able to run for 25 years.

For the MPF, it will be assumed to be contribute as HKD 1,000 per month

Protection need

Under Crystal’s current financial situation, she did not need to support her family but able to take care of herself would be adequate. With an essential monthly expenses of $5,000, a total of HKD 1,200,000 insured amount would be suitable for her if the assumed rate of return is 5%.

As Crystal’s risk-profiling record had been expired, I asked her to update it accordingly and the result was aggressive and her investment objective is capital appreciation. Both of these were consistent with her previous record.

While