Update on Jamila's Financial Details

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School

Queensland University of Technology *

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345

Subject

Finance

Date

Apr 3, 2024

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docx

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Uploaded by PrivateProton19381

Building the Client Investment Strategy - Update You have just learned from your Licensee that Jamila has not yet signed any agreement with your Financial Planning practice. In fact, it hinges on whether she likes your approach and the recommendations you make in this preliminary plan. Therefore, you have been given the following details to work with. They comprise typical averages for someone in Jamila’s situation, and include estimates for her income, expenses, assets, and liabilities. Income: 1. Salary: $205,000 p.a. 2. Bonuses: This can vary widely, but let’s estimate a modest 10% of her base salary: $20,500 3. Investment Property Income: Assuming a rental yield of 3-5% p.a. for an $800,000 property: $24,000 - $40,000 4. Partner’s Income: Not specified, so we’ll exclude this from calculations. Total Estimated Income (Gross): $205,000 (Salary) + $20,500 (Bonus) + $24,000 (Low-end Rental Income) = $249,500 per annum Expenses: 1. Living Expenses: A general rule is that living expenses can be around 30-40% of gross income. For high earners, it can be less, but we’ll estimate on the higher side due to potential higher living standards: $70,000 - $100,000 p.a. 2. Mortgage Payments:  Primary Residence: Estimated at a 30-year term with a 3% interest rate, monthly payments would be around $2,575 ($30,900 p.a.).  Investment Property: Under similar terms, monthly payments would be around $1,898 ($22,776 p.a.). 3. Property Taxes and Insurance: Assuming around 1.5% of property value p.a.: $33,750 (Total for both properties) 4. Health Insurance: Around $3,000 - $5,000 p.a. 5. Car Payments: Assuming a car loan of $30,000 at 5% over 5 years: around $5,680 p.a. 6. Savings and Investment Contributions: Let's estimate that she saves or invests 20% of her income: $49,900 p.a. 1 | P a g e

Total Estimated Expenses: $70,000 (Living) + $30,900 (Primary Residence Mortgage) + $22,776 (Investment Mortgage) + $33,750 (Property Taxes and Insurance) + $5,000 (Health Insurance) + $5,680 (Car Payments) + $49,900 (Savings/Investments) = $217,006 per annum Assets: 1. Primary Residence: $1,450,000 2. Investment Property: $800,000 3. Savings: $220,000 (Current savings, not adding annual savings contribution) 4. Superannuation: Without knowing the balance, let's conservatively estimate $200,000 given her income and assuming several years of contributions. 5. Personal Property: This can vary widely, but let’s estimate $50,000 for a car and other personal items. Total Estimated Assets: $1,450,000 + $800,000 + $220,000 + $200,000 + $50,000 = $2,720,000 Liabilities: 1. Mortgage on Primary Residence: $610,000 2. Mortgage on Investment Property: $450,000 3. Car Loan: Assuming $30,000 as per the car payments estimation Total Estimated Liabilities: $610,000 + $450,000 + $30,000 = $1,090,000 Net Worth (Assets - Liabilities): $2,720,000 (Assets) - $1,090,000 (Liabilities) = $1,630,000 These estimates provide a broad overview of Jamila's financial situation, which appears to be quite healthy with a substantial net worth. Her high income and consistent savings strategy should enable her to plan effectively for her future family and other financial goals. ***You are free to vary these estimates if you wish*** 2 | P a g e

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