John is forty years old, and works in the Private Sector. He feels it is still too early to worry about old age, and does not have a systematic investment plan. His focus is very much on the quality of life at present. As his financial planner, discuss the types of risks he is likely to face post retirement
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John is forty years old, and works in the Private Sector. He feels it is still too early to worry about old age, and does not have a systematic investment plan. His focus is very much on the quality of life at present. As his financial planner, discuss the types of risks he is likely to face post retirement
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- a). Akua intends to save 1,000 a year for her retirement until she is 55 years old, at this age, she will stop paying into the account, though she will retire at 65. If the retirement account earns 10% interest per year, how much will Akua have saved at age 65? She is 35 years at the moment. b). Financial markets and its institutions are seen as the central nervous system of an economy and must be regulated at all times. Discuss the key roles played by financial markets, and outline two (2) reasons why they must be regulated. c). Explain the difference between money market and capital market and mention two (2) securities traded in each of these markets. d). MTN was able to raise only GH¢1.15billion out of the expected GH¢3.48billion from its Initial Public Offering which lasted from May 29, 2018 to July 31, 2018. Even though the share sale exceeded the minimum of GH¢348million or 10 percent of the total required for the offer to be declared successful, it still represented only 32.97…Jerry, who is age 56, was just called into the president’s office at Napa Sunrise, Inc. He just learned that his position has been eliminated in the recent reorganization. While he is devastated, he thinks he may attempt to retire and work on his golf game. Jerry has a retirement plan at Napa Sunrise, which permits lump-sum distributions, and has accumulated some personal savings, but not enough to sustain him until age 65. Jerry also worked for KMA for 30 years and expects to receive a pension from KMA at age 65. He also expects to receive Social Security at age 67. Which of the following is correct? A. Jerry could begin taking substantially equal periodic payments, which would avoid the early withdrawal penalty, but he could not stop the payments until age 59 ½. B. Jerry cannot access his funds at Napa Sunrise prior to full retirement age for the plan. C. Jerry can take any distribution permitted by the Napa Sunrise plan and avoid the early withdrawal penalty…Martha is 25 and has a very low net worth. Considering the life cycle, her most pressing financial concern is probably: Oasset acquisition planning O liability planning O estate planning insurance planning O tax planning
- Allison and Paul are married and have no children. Paul is a lawyer who earns a salary of 80,000. In November 2018, Allison quit her job as a copy editor and began exploring the possibility of breeding and showing horses. She would run the business on their property. Allison expects to travel to nine or ten horse shows during the year. While researching the activity, she came across an article entitled: IRS Cracking Down on Horse BreedingIs It Really a Business or Is It a Hobby? She is unsure of the tax ramifications discussed in the article and has come to you for advice on whether her activity will be considered a business or a hobby. Allison provides you with the following projections of the 2019 income and expense items for the horse breeding and showing activity: Revenue: Expenses: Paul and Allison expect to receive 6,000 in interest and dividend income, they will have an 8,000 net long-term capital gain, and their other itemized deductions will total 16,300 in 2019. Write a letter to Allison explaining the factors the IRS will use to determine whether she is engaged in a trade or business or a hobby. You should also provide her with a calculation of their taxable income and tax liability and explain the difference(s) caused by the classification of the horse breeding and showing activity as a business or as a hobby.The expenses associated with sending two children through college prevented Victor and Maria Hernandez from adding substantially to their investment program. Now that their younger son, Joseph, has completed school and is working full time. They would like to build up their investments quickly. Victor is 47 years old and wants to retire early, perhaps by age 60. In addition to the retirement program at his place of employment, Victor believes that their investment portfolio, currently valued at $115,000, will need to triple to $345,000 by his planned retirement time, in 13 years. He and Maria realize that they will have to sacrifice a lot of current spending to save and invest for retirement. What rate of return is needed on the $115,000 portfolio to reach their goal of $345,000 (assuming no additional contributions)? Use Appendix A-1 or visit the Garman/Forgue companion website. Round your answer to the nearest whole number. Round ‘Future Value of a Single Amount’ in intermediate…Larry is married and has five children. He is worried about the stability of his current employment and does not have a lot of savings. Larry sought out financial advice and he was told to purchase a life insurance policy that provided him with total control over the lifetime benefits, just in case he becomes unemployed. Since his estate is significantly under the estate tax exclusion amount, Larry is not concerned about the policy being included in his gross estate. He plans to name his spouse as the beneficiary to ensure that she, and his children, will be adequately provided for in the event of his death. Which one of the following techniques satisfies Larry's planning objectives? A) Larry should have a life insurance policy that is owned by an irrevocable trust. B) Larry should have a life insurance policy that is owned by a revocable trust. C) Larry should purchase a life insurance policy that names his wife as the insured. D) Larry should purchase a life…
- Sam is currently 30 years of age. He owns his own business and wants to retire at the age of 60. He has little confidence in the Social Security system. He wants to retire with an annual income of $72,000. a. If Sam believes he will live to age 90, how much does he have to accumulate by the time he reaches age 60 to receive $72,000 at the end of each year for the rest of his life? Sam believes he can earn 8 percent on his money in a stock mutual fund. $810,560.40 b. How much does he have to accumulate if he wants the payment of $72,000 at the beginning of each year? $875,405.23 c. What dollar amount of interest will Sam have earned during retirement if he receives his $72,000 at the beginning of each year?Milhouse, 22, is about to begin his career as a rocket scientist for a NASA contractor. Being a rocket scientist, Milhouse knows that he should begin saving for retirement immediately. Part of his inspiration came from reading an article on Social Security in Time. The article indicated that the ratio of workers paying taxes to retirees collecting checks will drop dramatically in the future. In fact, the number will drop to two workers for every retiree in 2040. Milhouse’s retirement plan allows him to make equal yearly contributions, and it pays 9 percent interest annually. Upon retirement, Milhouse plans to buy a new boat, which he estimates will cost him $300,000 in 43 years, which is when he plans to retire (at age 65). He also estimates that in order to live comfortably he will require a yearly income of $80,000 for each year after he retires. Based on his family history, Milhouse expects to live until age 80 (that is, he would like to receive a payment of $80,000 at the end of…Tony is now 65 years old, and has no property. He has $6 million in a saving account, and is now worrying about insufficient financial resource for his retirement. Identify two investment portfolio.
- A 55 year old executive is considering retiring and asks your opinion whether it would be better for him to gift $500,000 ( in cash) to his only daughter or invest the $500,000 and bequeath the $500,000 plus earnings to his daughter in his will. The executive is healthy and expects to live at least another 20 years. His entire estate is expected to be in excess of the exclusion amount. What advice would you give the executive? Explain your reasoning including any assumptions as to taxes, earnings rates on investments, spending patterns, potential changes in tax law, and so on. Would your answer be different if he wanted to give stock which has significantly appreciated since he purchased it? In the alternative, how might the annual gift tax exclusion be used to transfer value to his daughter?Raj Shah, aged 36 years, is employed with a MNC. His wife Pooja, aged 34 years, is also working part - time. The couple has two children - daughter Rima aged 7 years and son Ansh aged 4 years. Raj and Pooja require your help to make a few financial decisions. (You can make any assumptions to further build up your case)a. Raj and Pooja want to invest for their children’s higher education for the long term (over 12 to 15 years). Develop a plan so that they can accumulate a sufficient education corpus. b. Raj wants to take a Life Insurance cover of Rs 1.5 crore. Advise him whether he should go for a ULIP or a term insurance.Suppose you are 28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. n finance, human capital of an investor is defined as the present value of all the future earnings of this person. For young investors, human capital usually constitutes a large percentage of their total wealth. Human capital is subject to mortality risk—the likelihood that the investor dies prematurely and therefore loses all the labor income of subsequent working years. The loss of an investor's human capital is borne by his/her family. The life insurance policy provides protection against mortality risk. Which of the following is likely to be the best life insurance choice for you and your spouse? a. Buy a small life policy in the beginning and gradually increase the death benefit as you and your spouse age. b.Buy a large life policy in the beginning and gradually reduce the death benefit as you and your spouse age.…
