Financial Planning for Mr George Tan & Mrs Mary Chan
Batch No: DBA 2A/11 Lecturer: Ms Cindy Lum Submission Date: 18 May 11
Wong Kim Fatt Hoon Qiu Ning Huang Hui Zhen Eldwin Quek Kiok Liang James Chua Ming Loon
Page 1: Title Page Page 2: Contents Page 3: Executive Summary Page 4: Table 1 [Financial Plan for 20 Years invest in stock, ordinary annuity & annuity due] & Company Background Page 5: Table 2 [Comparison of investment options in term of risk and return] & Chart 1 [Comparison of capital and return for investment] Page 6: Recommendations for Part 1 Page 7: Table 3 [Renting compared to buying a home for staying purpose] Page 8: Table 4 [Monthly payment for principal and interest of $120,000 mortgage] & Calculations for monthly mortgage payment & Total interest incurred. Page 9: Recommendations for Part 2 Page 10: Conclusions for both Part 1 & 2. Page 11: References Page 12: Appendices Page 13: Appendices Page 14: Appendices
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Executive Summary We have planned a financial planning for newlywed couple, Mr and Mrs George Tan with little knowledge of investment and low risk profile. They are early thirty with $6,000.00 combine of income monthly. We have prepared a comparison table and chart on stock, ordinary annuity and annuity due in term of return and risk profile for investment time frame of 20 years. Besides, investment company background also been analysed by us due to market stability and durability issue. According to their risk profile, we encourage them to invest in annuity due of $300.00 quarterly payment at 8% interest compounding quarterly. Total investment amount of $24,000.00 and return of $35,294.23 in 20 years time. Buying a house definitely is better option than renting for this couple because their financial status is allowed them to own a house with comfortable instalment payment monthly. We have compared between five banks in term of loan tenure, interest rate, monthly instalment and total interest incurred. CIMB Bank with loan tenure of 10 years, annual interest rate of 5%, monthly instalment of $1,273.20 and total interest of $32,784.00 is the best option in term of total interest payable. Although the monthly instalment payment is the highest among the others, but it is worth because of lowest annual interest rate and loan tenure. By selecting CIMB bank, they will work faster towards financial freedom.
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Financial planning for Mr George Tan and Mrs Mary Chan with combined income of
$6,000.00 per month. Table 1: Financial plan for 20 Years invest in stock, ordinary annuity and annuity due Investment Type Common Stock Ordinary Annuity Annuity Due Expected Annual Interest Rate 15% 8% 8% Compounding Frequency Monthly Semi-Annual Quarterly Total Capital ($) 3,000.00 24,000.00 24,000.00 Accumulated Return ($) 56,146.48 33,015.60 35,294.23 Maturity Value ($) 59,146.48 57,015.60 59,294.23
Company MacDonald’s Corporation Post Office Saving Bank Post Office Saving Bank
Refer to appendices Figure 1 to 3 for computation. 1A. Company Background
i) McDonald’s Corporation McDonald’s Corporation was founded in 1948 based in United States, listed New York Stock exchange and composite index of Dow Jones Composite. Macdonald’s Corporation franchises and operates McDonald’s restaurants as a worldwide foodservice retailer. McDonald’s restaurant offers variety of fast foods, hot and cold beverages. As at 31 Dec 2010, the company operated more than 30,000 restaurants worldwide. This company has around 400,000 full time employees. ii) Post Office Saving Bank (POSB) POSB founded in 1877 by the British colonial government. After acquired by DBS Bank of Singapore in Nov 1998, DBS attempts to continue offers low-cost banking services to Singaporean. POSB’s parent company, DBS is listed in Singapore Stock Exchange and composite...
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