个人财务与投资分析.docx

1、个人财务与投资分析Suggestions on Andrews investment1. IntroductionTo have comfortable life, it is important for one to earn more, but no less is the right management of money, as acclaimed by Carlos (2009). Andrew is facing the problem of managing his money effectively, so this report is written to give him

2、some suggestions. Before writing, the work of referring to the introduction of his situation and the checking of the internet for information of proper financial products and services has been done carefully.As was written to illustrate the fact that how to schedule your finance and how to invest ef

3、ficiently, this report is not only fit Andrew very well but will also be helpful for someone who is unfamiliar with financial services and products but want to manage their wealth more efficiency.The report firstly analyzed the financial structure of Andrew; in addition, It worked out the future fin

4、ancial needs of Andrew; then, It checked to find proper financial products or services mainly by internet; and finally, It come up with a conclusion which includes a series of financial products and services that fits Andrew well, also It helped him on how to deal with it effectively.2. Analysis of

5、financial services2.1 Current financial structure of AndrewSavingsAccount5,000Current account1,800Royal Bank of Scotland60,000Prudential6,000Aberdeen asset Management30,000InterestIncomeDividends$500/monthInvestment? PortfolioPensionsTable 1. Andrews financial structureForm table 1 we can clearly kn

6、ow what Andrew has and how much are they to investment. The calculation of his assets and net income in detail is as following:As he has buy a personal pension for five years, and he does currently pay 6% of his gross salary into it, so in total he has put $14400 into the personal pension schedule.A

7、ccording to the Tax relief on personal pensions, he ends up to have $ 18000 in his pension pot.His assets include some ordinary shares of three companies, money in bank accounts and a flat. The number of ordinary shares is as following:Aberdeen Asset Management30,000Prudential6,000Royal Bank of Scot

8、land60,000Money in his current account is 1,800 and in his easy-access savings account is 5,000. The flat is a 2-bedroom flat near the centre of Edinburgh.His debt is the mortgage of his flat to pay in five years.He may pay tax include income tax and tax on saves and investments.According to the rul

9、e from the website of UK (2011), to calculate his tax on income, we should firstly calculate out the taxable income which is gross income of salaries and investment; then less debt and pension contributions, and lastly to find the right basic rate to do the final calculation. The process of calculat

10、ion is illustrated as following, Andrew and calculates it out by himself with further information on his financial condition. He can also search for online help by visiting the website of HMRC Online Services.Taxable Income 48,000 Less Personal Allowance ? ? ? Less Pension Contributions 3,600 Income

11、 tax chargeable on ? ? ?Basic Rate at the fittest level ? ? ? Tax payable = ? ? ? Tax rate on earnings by different way or on different financial products are usually different from each other. Any interest earned (on savings accounts, certain types of OEIC etc.) is usually taxed at 20%, while inves

12、tment income in the form of dividends from company shares, for example, is only taxed at 10% (Arthur, 2009). When he sell his assets, such as his flat or his ordinary shares he has to pay for a Capital Gain Tax at the tax rate of 18%.His income includes his after-tax salary, dividends and interests

13、from his banking account. But more attention should be pay on about his net income or to say the cash flow he can moister to invest. He has $500 per month left over from his salary that he can save or invest elsewhere, so it add up to $6000 every year he can collect to save or invest elsewhere, this

14、 is his net income via his salary. He can also receive some dividends by his ordinary share though stocks he own and interests though his current account and easy-access savings account. Interests of his current account and his easy-access savings account are various from different banks and time to

15、 time, but Andrew and easily find them from the website of the government of UK.2.2 future financial ambitions of AndrewHe wishes to use the funds he has available to travel the world for at least two years when he retires, so the investment terms supposed to be totally 10-12 years and of course he

16、suppose the much reward the better.He has to pay for mortgage for his flat in the next five years, so he should be clarify in the first 5 years while in the last 5 to 7 years. In the last 5 to 7 years he can invest into some financial products which is more risky besides remains some money for his l

17、iving. After backing from his travel around the world, Andrew has to plan for his rest life, as he has to have a flat to live in, but do not need one after his death, I suggest him using Reverse Annuity of Real Estate and life insurance. So this report suggests him to divide his investment term into

18、 three. The first one is his first five years, the second one is his other 5 to 7 years, and the third one is from his back of travel to his death.2.3 Range of products available to Andrew The financial sector includes banks, insurance companies, finance houses, investment trusts, fund managers, the

19、 stock exchange and so on. They provide many financing tools include investor shares, bonds, and warrants and so on. As he has no obvious inclines that all these financial products and their portfolios can be available to Andrew.Information in details of financial products which may fit Andrew is as

20、 following,Pensions: Pensions are designed to provide regular income for people when they retired. Blackburn (2007) had discussed a global pension plan which includes a various kinds of pensions which suggested that There are really many different types of pensions, and they are traditionally been m

21、anaged by pension funds and insurance. Now, let us practice to find how the tax relief on personal pensions works: if Andrew put 80 pound in to his personal pension schedule, he can ends up with the right to claim that he can get 100 pound in his pension pot. That is to say the investor of the pensi

22、on can claim tax back from the government at the basic rate of 20%.To check whether you can get a state pension, you can find more information in details by the website of UK government. You can also find information on personal pension investment there. You can buy pensions though two ways: getting

23、 one through your job, or setting up your own. Also, you can choose both.Reverse Annuity of Real Estate: It is a financial product mainly designed for retire persons. It works in the following way: when a person retires, he can get a payment from the bank for a certain year, or until his death. Then

24、 in the final of the term, or when the investor dies, the bank will get the real estate.Life insurance is the most important way to deal with uncertain situations, especially for old people who are really easy to be ill. Also it fits Andrew well when he having the travel all over the world. He can g

25、et information easily from the insurance companies or online services of insurance institutions.Suitable tax-free products include: fixed rates fund and premium bands of banks and ISAs and National Savings & other Investments. They are always serve by the bank, or have close relationship with the go

26、vernment. They are always financial products with low risk and low reward.As the very fast development of financial products, now days just like Baddepudi (2007) comes up with, other important financial products such as ITs, UTs and OEICs are playing a more and more important role in the portfolio.I

27、T here is short for investment Trust which is a public limited company to sell its assets by shares in the secondary market, it mostly used in the UK. ITs are close-ended fund. In fact IT is not in fact a “trust” but a separate legal person or a company in the sense of law. It operates and trades li

28、ke any other quoted company. People hold it by shares which are traded in the secondary market and the share price is determined by supply and demand monthly. It has low risk but high reward when compared with UTs and OEICs.UT is the abbreviation of Unit Trust which is equal to Unit Investment Trust

29、. In fact, UT is a Trust which broken down a portfolio which includes lots of money into unit, this is where the differences lies between UT and mutual fund, according to Sharpe (1996). It is sold by unit and it is easy and cheap to trade. For its average risk is equal to the portfolio it comes from

30、 which is low, its reward is also low.The management company plays a very important role for a unit trust to be successful. The management company gets shares form companies and they put them together to form a capital pool, then they create UTs by divided the capital pool into unit. The management

31、company burdens the responsibility to advertising and selling the UTs, and they make money by selling UTs. There are lots types of UTs, among which the most common are cash equivalents, property, mortgages and securities. Expenses for investing UTs include operating expenses and sales charges and en

32、trance or exit fees. The operating expenses of UTs are low because they are not buying or selling by shares. But different from many other financial products namely ITs or OEICs, UTs always has a sale charges and entrance or exit fees. It is also called participate Trusts for both the investor and the owner of the capital of unit trusts shares the rewards and risks. OEIC is equal to its full name-Open-Ended Investment Company. It operates and trades by shares like IT, but it is an open compan