During the last week of December 2021, John re-assessed his situation with the following result: He achieved his short-term goal of smartphone replacement. It was accomplished in 2021 whe he ended his postpaid plan and the contractual obligation, then owned the phone at currer market value of P10,000. ● ● ● The intermediate goal of buying a car is still in the pipeline. The necessity of ease commuting t work and reducing the high cost of transportation made him chose to buy a motorcycle earlier t- his target year of owning a car. He diverted the use of his funds and tied up to monthly loar amortization of P3,343.37 until June 30, 2023. Having a family, saving for children's education, and purchasing a house are still on the sideline
During the last week of December 2021, John re-assessed his situation with the following result: He achieved his short-term goal of smartphone replacement. It was accomplished in 2021 whe he ended his postpaid plan and the contractual obligation, then owned the phone at currer market value of P10,000. ● ● ● The intermediate goal of buying a car is still in the pipeline. The necessity of ease commuting t work and reducing the high cost of transportation made him chose to buy a motorcycle earlier t- his target year of owning a car. He diverted the use of his funds and tied up to monthly loar amortization of P3,343.37 until June 30, 2023. Having a family, saving for children's education, and purchasing a house are still on the sideline
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Estimate the annual savings for retirement
Transcribed Image Text:During the last week of December 2021, John re-assessed his situation with the following result:
He achieved his short-term goal of smartphone replacement. It was accomplished in 2021 when
he ended his postpaid plan and the contractual obligation, then owned the phone at current
market value of P10,000.
The intermediate goal of buying a car is still in the pipeline. The necessity of ease commuting to
work and reducing the high cost of transportation made him chose to buy a motorcycle earlier to
his target year of owning a car. He diverted the use of his funds and tied up to monthly loan
amortization of P3,343.37 until June 30, 2023.
Having a family, saving for children's education, and purchasing a house are still on the sideline.
He thought he could have a family after 6 years.
He has been saving money and accumulating wealth. He thought of protecting himself and his
future by starting to invest in retirement. He knew that the SSS pension is not enough to finance
his lifestyle after he stops earning income from employment, so he contemplated on how much
he is going to invest for retirement if he starts in 2022 at the age of 25.
To project the required savings, he needs to estimate the following:
> Expenses in retirement - Refer to Exhibit 1 of John's expenses. John still wants to travel when
he retires. The average annual rate of inflation is 3.25%
The duration of retirement- The compulsory retirement is at age 65 while the life expectancy
is 75 years.
> The return on savings in retirement is 4%
Transcribed Image Text:Exhibit 1
JOHN's Expenses
2021
Rent Expense
42,000
90,000
12,000
Food
Clothing
Transportation
15,600
Fuel and maintenance
10,000
24,000
4,800
6,000
20,000
Cell phone
Insurance-Gadget
Internet and cable TV
Entertainment and travel
Interest expense
Total expenses
224,400
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