Your Financial Roadmap to Success

Introduction

Following some of the desires you have to achieve within your lifetime and for the ones you love adequately with your available resources, this financial plan is solely developed to provide you guidance with some of the actions and next steps you should take towards insuring that future. Based on a conventional financial planning process which we have agreed on over our several sessions, this plan will conclusively detail and summarize the first four steps and outline the fifth step for your own implementation. These steps include: Agreeing on goals and objectives, gathering data, analyzing this data and designing an action plan. Afterwards you will have the decision of whether or not to implement the plan and therefore advance to the review stage.

The action plan is based on a holistic consideration of your financial position drawn from the consideration of the information I gathered from you regarding your financial needs as well as the future aspirations that you have and meaningful assumptions guided by the relevant UK financial laws and Regulations.

Goals, Objectives and Aspirations

The goals and objectives as highlighted include:

Family security, in the event of your death or disability you require an annual income of

Retirement plan to be debt free at age 60,with a net income needed in today’s money is 42,000 Euros per annum

Education expenses: fund both Alex and Daniel’s education with 15,000 and 13,500 Euros respectively until completion of their university education starting with Daniel at age 13 and Alex at age 14.

Provide a sum of 75,000 Euros house deposit allowance to both of your children at age 21

Estate Planning: Mortgage Settlement at the end of 19 year term, Exploration of the various pension schemes for both you and your husband, To review your exposure to Inheritance tax, Understanding Tax on withdrawals of your trust fund inheritance

Health Insurance: Contracting a Life Assurance cover for your mother

Attitudes to Risk and other subjective data

Information captured in the questionnaire with regards to your risk attitudes towards different financial positions and changes in life course is captured within this section. In being able to minimize all risks within the course of achieving your financial objectives and obligations consideration of these risks are key in the implementation process of the subsequent plan developed. Two major types of risk factors are highlighted in this section including: attitudes in Mortality and Morbidity risks as well as investment risk attitude.

Attitude towards Mortality and Morbidity Risk

How concerned are you about the risk of financial loss to you/ your beneficiaries/ your business caused by:

1. Untimely death? You are slightly concerned

2. Critical illness/ disability? You are extremely concerned

3. Medium to longer-term sickness/ disability? You are extremely concerned

4. Needing long-term care in old age? You are not concerned

Assumptions

Given fluctuating economic conditions and dynamic currency exchanges prediction of future conditions is quite impossible especially within a constantly growing economy and different challenges arising. As such to be able to effectively analyze your financial position and develop a financial plan which takes into account future scenarios and changes in the economical, financial and social aspects of your life, assumptions with regards to all of these areas are a necessary prerequisite.

The listed assumptions have been made to support the analysis made herein and the subsequent recommendations.

General Assumptions

A major assumption made includes the ‘steady State’ assumption which highlights lack of significant changes in your personal circumstances, especially ones related to finances and a financial outcome unless indicated or highlighted within the interviews or financial questionnaire filled. This means that you will continue working until retirement at age 60 in your current or better position and anticipate being in good health condition until then. In addition taxation and insurance rates as well as allowances and reliefs will also remain unchanged Tax and National Insurance rates and bands, allowances and reliefs will remain unchanged in future in real terms. This applies to income tax, capital gains tax and inheritance tax. All calculations and figures used in this plan have been prepared using tax rates and allowances for the 2019-20 fiscal years. In addition, all state benefits excluding pension will also remain constant.

Current Financial Position

In being able to achieve your financial goals and objectives, determination of your financial worth is the starting point for your planning strategy and indicates what you own in relation what you owe others as well as your expenditure in relation to you earn. We can then highlight some of the ways with which this position can be improved in the future as a pathway towards achieving your financial objectives and goals.

Net Worth

Your net worth as 5th October 2019 is estimated to be £1,578,000 comprising assets of £1,738,000 less liabilities of £160,000. The detailed balance sheet is highlighted in Appendix II. This confirms you have more assets than liabilities. In the calculation of investment assets, lifestyle assets which include: the house and personal possessions are deducted from the assets giving a balance of £808,000 in a wide variety of holdings including bank accounts, quoted shares and individual savings account. These are the assets that can be applied towards the achievement of your financial objectives and goals. Given the financial plan includes your retirement objectives the pension funds accepted as alimony payment from your Ex-husband as well as your own pension fund already contributed in the last 5 years both amounting to £147,000 is also included to your gross disposable assets towards financing your objectives bringing the total to £955,000.

Tax calculations and Income/expenditure position

Another crucial factor in the consideration of your financial position and determination of your capacity to achieve your intended financial goals and objectives include your income/expenditure position. In order to establish whether or not you have a surplus of net income over expenditure I deducted income tax liabilities from your annual gross income and added income from other sources such as child maintenance before comparing the total sum to your total expenditures. Appendix III show highlights a surplus income of £21,486, this amount is inclusive of the child support funds received from your ex husband every month for given the lack of a savings plan or savings dividends of any kind. As such £21,486 represents the disposable surplus income which indicates a less expenditure with relation to earnings.

Asset allocation and asset locations

Based on the questionnaire you filled that entails a listing of all your assets and liabilities, your assets can be distributed in different classes as highlighted:

Asset allocation does not take into account asset location or ownership of the assets. Given the analysis of your assets and in sensible consideration of your financial management and capital and income resources, considerations are made to be able to cater for the financial plan include Transferring assets into sheltered investment in order to be able to earn interest and value establishing a cash reserve to be able to take care of the future aspirations given the current limited financial income generated will be critical. A reserve meeting up to 12 months of the planned expenditure which currently stands at £ 46,514. This suggests a cash reserve of up to £50,000. The key aspect of asset allocation is to establish different weightings of assets in order to plan favorably for investment opportunities that are not only appropriate but also fitting for the type of investment.

Summary of current financial position

In summary you have a gross investment capital of up to, £955,000 and up to £21,486 pa of surplus disposable cash to allocate towards the implementation of your goals and objectives. Given the need of opening a liquid cash reserve for to take care of your future aspirations some cash will need to be invested towards that, some will be used in various savings opportunity to earn interests.