Introduction to Financial Planning: Demographic Factors, Investment Alternatives, and Retirement Income Adequacy

Introduction to financial
planning

Table of Contents
INTRODUCTION...........................................................................................................................3
Question 1........................................................................................................................................3
a) Identification of demographic factors and evaluating its impact on rapidly ageing population
......................................................................................................................................................3
b) Process of financial planning and requirements of financial advisor......................................4
c) brief assessment of superannuation adequacy.........................................................................5
Question 2........................................................................................................................................6
a) Calculation of expected income and capital generation..........................................................6
b) Ranking of investment.............................................................................................................6
c) Risk attached to each investment alternative:..........................................................................7
d) Issues and benefits Gordon could achieve by diversification of investments.........................7
Question 3........................................................................................................................................7
a) preparation of cash flow statement..........................................................................................7
b) preparation of personal balance sheet......................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
This report will identify and evaluate the demographic factors that are the cause behind
the problem of rapid rise in ageing of population in developed countries across the world. The
report will highlight the process of financial planning.
Further in this report assessment of superannuation contribution requirements for
adequacy evaluation will be covered. This report will also analyse three investment alternatives.
In addition, preparation of cash flow and balance sheet will be discussed.
Question 1
a) Identification of demographic factors and evaluating its impact on rapidly ageing population
Demographic Factors
Demographic factors is the sum total of factors such as gender, age, race and ethnicity.
The demographic factors that are the cause reason for the issue of rapidly ageing population are
lower fertility and mortality.
Attainment of older population age structures already exists in many countries especially
the developed ones (Nepomuceno and et.al., 2020). Many developing countries are currently
facing an inclement in relative numbers of children, population within working age and older
citizens. People belonging to the age criteria sixty and sixty plus are consists of ten percent of the
world population.
Ageing of population is measured with the help of changes in the proportion of the
population based on categories namely old and middle age. The trends in fertility rates and
mortality rates are the primary determinants of population ageing.
Mortality rate: Also referred as death rate is a measure of the number of deaths in a
particular population per thousand individuals in a year (Downey, Kelly and Quinlan, 2019).
Fertility Rate: Total fertility rate of a population is the average number of children that a
woman would give birth to during her entire life if:
she was to experience the current age specific fertility rates through her lifetime,⇒
⇒ and she was to live from birth until the end of her reproductive life.
Lower mortality and fertility rate increases the share of retired people in the total
population. Increase in number of retire persons in the population exerts pressure on spending by