Personal Finance Planning introduction

Personal Finance Planning introduction

Since Ms. Chew is now 57 years old, it she has 6 years remaining before she can access the pension money that is available in her pension scheme as well as that of her late husband. With the planning of her finances, it will be important for her to establish the lifestyle she intends to live. That is whether it will be a luxurious one or a moderate one. At the same time, she has made a number of investments that are currently generating for her income at different rates.

It will be necessary to distinguish liabilities from assets so as to know chart the way forward adequately. Liabilities are the amounts she owes and at present, there is only one in the form of a longterm loan of $400,000 being paid at 5.95% per annum.

Her assets are the things she owns. They can be broken into four main categories. These categories are fixed assets, stocks, and cash and savings. Since the estates are already being managed, we will only need to focus on the others. The value of her stocks at present is $320,000. The cash amount is $60,000 and saving schemes are at $1,357,000.

Basic Needs

These are the most basic of requirements and they include food, shelter and clothing. Given the fact that she lives alone, it may be advisable to move to a cheaper house and sell or rent out the one she currently occupies.

She should also ensure that there is adequate money for the food she consumes on a daily basis. This would ideally be a figure that is broken down on a weekly basis.

The revenue source for financing her basic needs is her cash and this means that the budget has to be within the amount of cash she has access to.

Wants: Wants are basically items that one desires and they may very well have the same priority as needs depending on personality and financial position. Financing of these items is based on the amount of cash that is available after the budgeting of basic needs and the amount she intends to save or invest.

Given the fact that she has recently lost her husband and retired, one of her wants may be a going on a holiday or picking up a new hobby.

She may want to purchase luxurious items such as jewelery or new clothes.

Redecorating her house is another potential want that may arise.

Another want may in the form of supporting a Charity in her area.

Since she lives alone, she will be inclined to be inviting friends over for dinners or alternatively prefer to eat out in restaurants.


These are a series of targets that she has set for herself.

This lady desires to have financial organization so that she can keep tabs on the day t day situation of her finances and this includes the state of her shares, value of her properties and also her expenditure versus incomes.

One of the goals she has is financial independence whereby she can sustain her life without needing external monetary contributions. This is seen in the uncertainty she expresses about her investments sustaining her in the future.

Another goal she has is to maximize on the investments she has made in different areas.

Sustainability of her investments in terms of their necessity and profitability.


These are the necessary steps or milestones that she needs to make so as to realize her goals.

Appraisals of her present investments so as to decide which ones are most promising as well as the ones that she needs to let go of. This way she will have more confidence in their future performance.

Clear with present liabilities: At present, she is in the process of paying a $400,000 loan she borrowed to finance her rental properties.

Risk Profile

This is an expression of her willingness to take risks with the money that is currently at her disposal. The greater the returns expected, the higher her risk profile goes. At present, her risk profile is quite low since she has invested a moderate amount of money in shares. If she is keen on increasing her income from the investments, it may be necessary to put more money in various investments that promise higher risks.

Possible Strategies that May be Used and their intended Outcomes

The first thing that she needs to do is to ensure there is a professional who has been contracted to manage for her the finances. This may be on a part-time consultancy basis. Such an individual will advice her on how best to leverage the incomes she is currently receiving from the different investments. This may mean selling off her current stocks and investing in others whose returns are more in line with her long-term goals.

For her to attain her financial goals, it will be necessary to cut her costs of consumption without necessarily suffering for the same. This can be achieved through substituting the products she consumes on a daily basis with cheaper alternatives. The benefit of this will be increased savings which will provide her with financial security.

To generate more income, it might be necessary for her to move to a smaller house and rent out the 1.5 million dollar since it is of little financial gain if she occupies it alone. The act of renting it out will provide her with an increased income thus reducing her reliance on the riskier ones such as shares.

Latest Assignments