Financial Planning Practice (Assessment 2)

Financial Planning
Practice (Assessment 2)
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Contents
Contents...........................................................................................................................................2
Suitability report and risk profiling:.......................................................................................3
Income and expenditure analysis:..........................................................................................3
Life time cash flows, Scenario Analysis and Recommendations:..........................................4
Conclusion and suggested action plan for the client:.............................................................6
REFERENCES................................................................................................................................7
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Suitability report and risk profiling:
Risk is considering as essential element which every individual needs to colder before taking in
decision regarding their future planning. In case of David Ford, he is wanting to invest his capital
in exchange bonds, and gold security the rate of risk regarding taking portfolio of these securities
is very high as due to the trade war between gulf countries and impact of Brexit agreement, share
price of these securities has been impacted in upcoming future time period however, their price
may be raise and it is possibility that invest in these securities may give them future benefit and
higher rate of return. Moreover, he wants to spend his money in buying house as well as save his
money for retirement time period thus he need to invest in such type of portfolio through which
risk rate is minimal and return on invest rate is high (Topa, Lunceford and Boyatzis, 2018). Thus
he needs to take decision regarding investment in bond security rather than in gold.
Income and expenditure analysis:
Analysis of incomes of David Ford exhibits that there are four major sources of income
namely: Earned income, dividends, premium bond income and interest amount received. The
earned income is of £80000 which is major source of income of David. Earned income here is
salary which is taxable in the slab of 40% tax. While David’s dividend income is £1000 which is
tax free because of dividend as well as Premium bond income of 62.50 is also tax free in UK.
Further interest received income of £200 that is also exempt since interest up to £ 1000 is exempt
in UK.
On other hand, there are mutiuple expenses incurred by Davind which are of personal
nature (means Expenses not qualify for tax reliefs) like Food, cloths, council tax, Gym
membership, Phones, Socialising,, travel, Miscellaneous, Gifts, birthdays etc. Specifically in case
of car loan repayment, car is used by David for perosnal use thus he can not claim this money
against tax (França and Hershey, 2018). Also, same treatment would be in case of
Lloyds personal loan payment amounting 99 per month and Interest payment on HSBC credit
card amounting 100 per month. In this regard, following is summary of expenses and income:
Expenses:
Particulars Amount
Food 6000
Clothes 3600
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