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KAPLAN SRP 0209 assignment q 6 QUESTION!

Discussion in 'Financial Planning Study Group' started by Mozzzza, 24th Aug, 2009.

  1. Mozzzza

    Mozzzza New Member

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    Hi All!
    Would really appreicate some advice here...
    I'm doing Question 6 on the Superannuation and Retirement Planning assignment

    I have estimated that when Richard and Bernadette retire they will need approx $400,000 plus. Meaning that there is a shortfall of 8 years.
    This shortfall costs $47500pa (as this is their day to day living expenses).
    What strategies can I use (ie TTR, super transfer, gifting etc) that will be suitable in their circumstance? I tired TTR, but Bernadette isnt earning enough for it to be viable, she will drawn down more from her allocated pension then she will be putting in.
    HELP!!!
    Thank you!

    Heres the question:
    Bernadette now wants to retire when she turns 65. Assume that Richard has already
    retired. Based on the facts presented in the case study, prepare a detailed report
    describing the strategies and types or styles of investments you would consider the couple
    to undertake to satisfy all of their goals and objectives both now and in preparation for
    retirement. Include in your answer the reasons why such strategies and investments would
    be suitable for the couple.
     
  2. BB**

    BB** Member

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    helpful hints

    Hi
    How are you going with the rest of your assignment? Have you done the previous questions first before you do this question?
    The other earlier questions enable you to work out the kinds of strategy's that will help Richard & Bernadette.
    Q6 is like a big conclusion to what you have worked out in your previous questions.
    You are on the right track about gifting etc.
    You just need to work out where they are now, where they want to be and then most importantly, as you know those 2 things, is how you're going to get them there.
    From the things that you have mentioned in your question you already have a good understanding.
    msg me back and let me know what you have done in your other q's
    BB**
     
  3. BB**

    BB** Member

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    In q3 it asks you to work out a transition to retirement for Bernadette. Have you done that? I understand what you are saying, but you could place a larger amount into her super and draw down an amount from an allocated pension for her. TTR is benificial because her tax rate drops and any associated offests will go up. You could work out a before and after TTR for her with all earnings that she has. All the previous questions are going to help you get q6 on the right track. I hope this is helping.

    remember that he will be eligible for some form of gov help too

    and who should have the bala nce of the super funds? should they both have it split? or together as one lump?
     
  4. BB**

    BB** Member

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    Also remember they have funds elsewhere. Take your time and have a look at what they have and work out what to do with it that will be most beneficial to them and tax effective/assets & income tests etc
     
  5. banana1

    banana1 Member

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    Q3 Ttr

    Hi there.
    I dont understand how TTR is benefiting Bernadette.
    i realise that she enjoys her work so it would be best for her to stay working full time and salary sacrifice into super. My question is her income is already quite low so she is effectively on the lowest tax bracket.

    Also how do we determine how much she should sacrifice into super and how do we work out how much she should draw down from her pension?

    I've estimated she sacrifice $20,000 of her $26,000 income so the remaining $6k will be tax free. But the $20,000 will be taxed 15% in conts tax.

    Ive also estimated she draw $18k in the TTR pension.
    Does this sound right ?

    As Mozza mentioned she will be drawing more than she is sacrificing into super. I've tried increasing the amount she will be sacrificing but it doesnt seem beneficial. Yet we still need to outline a TTR strategy for her?

    Help :(

    The study notes don't detail this at all. I'm finding that simply using the study material provide will not suffice for a pass.
     
    Last edited by a moderator: 27th Aug, 2009
  6. BB**

    BB** Member

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    Hi :)

    you are certainly on the right track! You also need to consider any offsets that she is able to get now and whether any of them will increase. Also show before TTR and after TTR calculations, using ALL of her income that she recieves. Its not just her salary income

    You are correct, she wants to stay working full time, so leave as is.

    With TTR what you are looking to do is increase her super balance before she retires. Remember what she has going in there will be accruing earnings as its invested, rather than her receiving and spending all her salary. Then the income that she draws will be drip fed from an allocated pension. There are lots of factors to consider and the more comprehensive your answer the better.

    Its up to you entirely how much you reckon she should do as a TTR arrangement, everyone will have a different idea, mine was different to yours, but the objective is still the same

    What they want you do do, is work out a strategy based on the facts presented.

    p.s GOOGLE FIDO, they have some excellent calclators on there that can assist

    hope this helps
     
    Last edited by a moderator: 28th Aug, 2009
  7. banana1

    banana1 Member

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    Hi BB

    You are a great help. I didnt consider her other income generating assets as part of this exercise.

    Bernadette has shares and is receiving an income.

    I've worked out the say she'll receive $255.67 in income from her ANZ shares.
    Which is 4.5% of her zna share value. Is this right ? Or do we need to consider franking and unfranked and credits etc... ?
     
  8. BB**

    BB** Member

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    Any time! :)
    yes she has her share income so you need to work out each share and how much they are worth, then the dividend income etc that she gets. popping it into a table is a good idea and show all calculations fo everything.
    also there is other income too, and you need to split as its in joint ac/s (50% share)
    if you type in franked or fully franked shares into google, heaps of info comes up and will show you how to work the figures (I can't recall whether they're fully franked or not)
    this is more Q3 stuff, but will assist in ou getting all the figure right for the end question which is usually worth the most points.
    have a good weekend
     
  9. BB**

    BB** Member

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  10. BB**

    BB** Member

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  11. banana1

    banana1 Member

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    Gee. This is a lot more complex that I thought. I''ll give it ago.
    Thanks BB. You're right about the chocolate too :)
     
  12. BB**

    BB** Member

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    don't worry, just read the question and answer each part in turn, take your time with it. All the naswers are in that book I promise! you will be fine, its just a case of working out all their income now and trying to work out based on their risk profile (or what profile they should be now) how much they need to retire on, have a look as I said on FIDO's calculators, these are great.
    work out...where are they now....where do they want to be and the bit that you need to work out is how you're going to get them there just do one bit at a time and it'sll come to you. You'll be on a whirl!!

    email me at becca27inaus@yahoo.co.uk, if you need to
     
  13. BB**

    BB** Member

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    yum yum......and a comfy sofa, gets it all into the brain LOL
     
  14. banana1

    banana1 Member

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    thanks bb :D I've handed in the assignment, have a strong feeling ill need to resubmit it again. Any study tips for the exam? :eek:
     
  15. BB**

    BB** Member

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    Read the book and take your time with it. I read it at home over 2-3 days, on the couch with yummy choc's and lollies and had a couple of rest/sleep periods in between. if you don't get something, re-read it
    exams, for me personally I make sure I have everything i need, like a calculator, pen, a sniff of peppermint oil helps for concentration and have lollies and make sure everytime one runs out that you pop another in your mouth to suck, my training manager told me to do that as I had real probs with my previous exam and I can tell you it really helps the nerves.
    you have to really read their questions as sometimes they can write something in a funny way so you think its an incorrect answer.
    I always go over my answers before submitting for the online exam. If you get stuck on one question, just leave it and do the others and come back to it, by then the brains getting clearer and things will come back to you
    I use highlighters and take small notes on my book to assist when I'm reading it in the open book exam and I think it helps to get things to stick
    you'll be okay :) let me know what happens with your assignment
     
  16. banana1

    banana1 Member

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    hi BB

    Just wanted to let you know that I somehow managed to pass the assignment. YAY.
    thanks for your help again. :)
    Now its to the exam..

    Have you completed the other modules of DFP?

    I noticed kaplan are offering a discount on DFP till the end of the year. Am considering completing the Investment and Risk modules.
     
  17. BB**

    BB** Member

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    that is fantastic! :) no worries, glad I could help you a bit
    I have done all the modules and have my diploma and will be moving onto the advanced diploma soon.
    Yes they are offering a good discount. I though think I'll be doing each one as I go along rather than purchasing them all together as they only give you 2 years I think it is to complete it. Give them a call to check, you don't want to pressurise yourself, some people on here say oh yeah, you can get them done really quick, but........if you're working full time and studying its good to do one at a time.
    well done you!!
     
  18. Shel

    Shel Member

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    Hi there,

    I am halfway through this assignment and feel like I am overthinking the whole thing. It's driving me nuts! Was wondering how you ended up answering qns such as 2 and 6, any help will be much appreciated.

    Thanks, Shel.
     
  19. HOCFP

    HOCFP Active Member

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    MAY 2010 SRP Assignment Question 2 HELP please

    I dont feel using online calculators is the approach for me, as it just confuses me more:
    .
    Although i have made some slight progress with the following:

    For estimating the capital required all i have done is added all there investment assets to get a figure. After I have multiplied based on karen's life expectancy lets say 24 years and multiplied this by there desired income to gain a figure. This figure I believe in a perfect world what they would need to have as capital.

    Now when analysing the gaps with what they have to what they need i have subtracted what they have to what they need and used that as a starting point to devise potential strategies around boosting thier super balances.

    My only concern with this approach is they have a gap of over 500k, surely that is not correct. I mean part of the remainder of the question states that we need to advise on different types of contributions to boost thier balances and also the age pension factors.

    Am i on the right track?
     
  20. hurricane

    hurricane New Member

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    Im in the same boat as you mate, I've had a look at FIDO's super calc and that seems pretty straight forward except I'm really not sure how KAPLAN want the question answered - I mean there is a small blurb in the notes regarding capital requirements but that doesn't say anything about working it out.

    Common sense tells me we need to work out the amount they require per year, times this by number of years (average life expectancy). Then add the amount of interest they'll receive in income per year (8.5% and 8% respectively) Each year this interest will decrease as the capital shrinks to fund the 50k per year. IS THIS WHAT EVERYONE DID OR DID YOU USE FIDO....????

    The other thing that springs to mind is having a large sum in capital which if invested in a balanced or aggresive fund assuming a rate say 8% - would produce the income required to live off (50k) - i.e 625k x 8% = 50k.....surely in an ideal word this would be a better solution as life expectancy would be meaningless (problem being guaranteeing the 8% rate of return)

    Any help would be greatly "appreciated" (as in $$ wink wink)