Shaun's Retirement Investment Plan

This assignment tasks us with analyzing Shaun's retirement investment plan. We need to examine the details of his current portfolio, including its asset allocation and expected returns. Based on his desired retirement income and risk tolerance, we must suggest adjustments to his investment strategy. This might involve recommending changes to the proportions allocated to different asset classes like managed funds, fixed deposits, government bonds, or Australian share funds. The goal is to create a plan that maximizes Shaun's chances of achieving his financial goals for retirement.

File Note – Statement of Advice
Client's name: Shuan McKenzie
Date of contact: 3 July 2017
Re: Initial Appointment
FSG and adviser profile
Shaun wants to invest his money to create value on his investment. FSG is financial sponsor
group covers private equity funds, hedge funds sovereign funds which could be used by
investors to create value on their investment.
Scope of advice
With a view to cover its monthly expenses after retirement, Shaun wants to invest $890,000
in superannuation to create value or increase his private wealth. Shaun could have various
options such as investing his money in private equity funds, hedge funds sovereign funds or
derivatives. The main investment idea for creating value on the investment could be related
to investment in diversified funds which will give high value creation. Shaun could invest
half of its money in money smart investment which will give around 10.6% rate of return.
However, it will have high risk. Nonetheless, investment in high growth fund will also give
10.8%. This level of investment in these funds will have cost of investment of .5%. If Shaun
wants to have zero risk on his investment then he could invest his full money in government
bond funds at 5% rate of return. However, the best investment option which Shaun could
have is related to investing 50% investment in government gilt securities and 50% in other
diversified funds (Rebennack, 2014). In addition to this, he could also take various insurance
plans and permanent disability insurance program to overcome possible risks.
Current situation
 The currently Shun has two plans either to invest in superannuation to get $890,000 at
the time when he retires or to have minimum amount of $ 43655 at the time when he
becomes 90.
 It has various options to make investment in diversified portfolio to increase the value
of his investment.
 It has income of $ 25000 on monthly basis. However, he has planned to drop its $ 100
income for its health purpose program.
Potential issues / special consideration
 This amount of investment strategy may result to destruction of its present investment
due to other marketing factors and present value discounted factors.
 Shaun has to face all the risk related to market and increased cost of capital. If return
on capital employed by Shaun is less than market cost of capital then it will result to
destruction of his investment.
 Establishment of coordination between all of his investment plans require complex
calculation which may be hard to understand.

 These diversified investment may give optimum level of return but high level of risk
as well.
 If he face some of disease and other abnormal problems then it may impact the cash
inflow and outflow from his account.
Objectives
 Cover up the future needs which Shaun will have after achieving his age.
 Creation of value on his investment.
 Identifying the best suitable investment option for his investment.
 Identifying the present value of investment and compare it with discounted value of
his future inflows throughout the time.
 Shaun has goal to renovate his houses and create value on his investment.
 After his retirement, he want to build a house or renovate his existing house
Risk profile
 The main risk of Shaun is related to investment in diversified portfolio. If Shaun
invest his money in diversified portfolio such as conservative funds, balance funds,
high growth funds, then in this case it will have high risk in getting return on his
investment. On the other hand, investment in gilt securities will have zero risk
 However, Shaun with the help of these diversified investment.
 Insurance cover will help Shaun to overcome risk problem in investment strategies in
market (Altuntas & Dereli, 2015).
Wealth creation recommendations – outside superannuation
1. Investment in specified funds to build up house for children
Recommended strategy:
 Shaun bank statement has shown that it has saving of around $25000 each month. It
will give him around 8% to 12% return on his investment on yearly basis. However,
investment in conservative and highly risky portfolio will give him average return of
14% to 17% on yearly basis
 The objective of retirement plan of Shaun is to renovate its home.
Allocation of funds
Shaun needs to allocate his funds in different mutual funds and investment plans.
However, investing in commercial papers and portfolio investment will increase the
supper multiplier funds.
Additional factors to contribute to reach retirement planning goal
Shun needs to maintain its monthly contribution in prepared set portfolio. However, if
could increase the cash inflow for these prepared portfolio then he should invest his funds
in portfolio set. In addition to this, he could also take hedge funds to create shield against
its debts.
Money Smart‘s requirement planning calculator
It is evaluated that if Shaun want to determine the amount of capital which he will receive
then he should use money smart calculator. In order to use this money smart calculator,

he needs to use cost of capital rate, return on investment and multipliers which will be
implemented on the invested capital.
Advantages of strategy
 It will create value of his investment on the average return creation by 28%.
 Diversification in various securities will help Shaun to reduce the associated risk.
 It will reduce the market risk and will also increase.
 Investment in conservative funds could increase the overall value of investment and
return on his capital employed (Bodie, 2013).
Disadvantages of strategy
 Shaun could destruct his investment or capital value if investment strategies went
wrong.
 There are several market factors which could impact the set investment strategies and
predetermined outcomes in significant manner.
 Changes in return amount and associated risk factors may vary with the changes in
market factors.
 Shaun could implement capital assets pricing model to compare its return on capital
employed and cost of capital (Das, 2014).
Alternatives considered
 Shaun could invest his monthly saving in fixed deposit or mutual funds. Fixed deposit
will give him earning of around average 8% on yearly basis.
 Investment in mutual funds will give him high risk and high return which depends
upon the business circumstance.
Lifestyle recommendations
1. Shaun could plan its family holiday in Cape Town by investing $25000 on monthly basis
in diversified portfolio.
Recommended strategy:
 Investment of 15% income in gilt securities for a return of 8% with zero the
association of zero risk.
 60% of value of capital collected in conservative funds.
 Investing 25% of his overall saving in fixed deposit to get return of 8% on yearly
basis and cumulative return of 12% on annual basis (DeFusco, et al. 2015).
Advantages of strategy
 It will help Shaun to achieve his desired plan with less complexity.
 Creation of value of investment.
 Reducing the risk with the systematic increment in return.
 $ 100 each month and making additional contribution to the superannuation to
multiply the investment plan.

Disadvantages of strategy
 If Shaun withdraw his deposited amount due to urgency then it will reduce the
determined investment.
 Shaun may face high risk in its portfolio investment due to high risk in his investment
strategies.
 Shaun might have deficiency in getting the predetermined capital amount to renovate
the house (Channon & Jalland, 2016).
Alternatives considered
 The main alternative consideration is related to investing more capital in portfolio
capital. This will help Shaun to get return of around 15% to 17 % on yearly basis with
very low risk (Frost, et al. 2014).
 Objective 2
Renovation of house
Recommended strategy:
2. Building or renovating house after his retirement for its effective looking could be done
by making annual investment of $ 10000 for 15 years at an average return of 15% in
conservative investment funds.
Advantages of strategy
 Investing in gilt security and diversified portfolio will create value of investment by
Disadvantages of strategy
 High risk and destruction of value.
 Creation of high value on investment if investment is made in equity shares and other
mutual funds
Alternatives considered
 If Shaun could take high risk then it will increase the overall return on investment. For
instance, investment in diversified portfolio and other securities will give him average
15% to 18% return on his investment.

Wealth creation recommendations – superannuation / retirement planning
1. Objective
Creation of value on his investment.
Recommended strategy:
2. In order to get $ 8, 90,000 in the investment plan, Shaun needs to invest his money in
managed investment, fixed deposits, government bonds and Australian shares. It is
evaluated that bifurcation of same is done on the basis of return and risk of the investment
(Hung, Mithulananthan & Bansal, 2014)
Advantages of strategy
 This investment strategy will increase the overall return on the investment and income
of $ 8, 90,000 on his retirement.
 Shaun could get $ 43665 on monthly basis as return on earning.
Disadvantages of strategy
 There may be chances to lose the possibility to get the required amount of return on
his investment due to other market factors.
 Shaun may need to change his investment strategies with a view to reduce the overall
risk and increase the overall return to $ 8, 90,000.
Alternatives considered
 If Shaun is ready to take high risk on his investment then he should invest all of his
100% investment in managed investment fund high growth plan. This investment
strategies will give 10.5% on his investment plan.
Wealth protection (insurance) - recommendations
1. Life insurance
Shaun could invest his investment money in Bupa life insurance for taking health life
insurance on his life and his family member’s life. However, the amount of premium
and maturity value in this investment will be available for tax deduction.
2. Total and permanent disability (TPD) insurance
 If Shaun could take permanent disability insurance then it will create effectiveness to
protect his life chances and compensating the life surety. This insurance plan could
increase the overall efficiency to encounter the risk arise from the permanent
disability in his life.
3. Income protection (IP) insurance
 This is the strategic planning to create shield against all the risk related to earn annual
income on his investment. Therefore, deficiency in the set income will result to
amount received from the insurance company. This will take insurance premium
amount.

4. Trauma insurance
 This is the insurance plan which Shaun could take from ICICI insurance company to
secure his mental and physical disability. In case, Shaun face these problems then he
will be compensated by the certain amount for the same.
5. Other insurance
 There are several other insurances plans such as health insurance, income saving
insurance and budget set insurance plan which will help Shaun to overcome all the
uncertainty
Estate planning
In terms of Estate Planning, we recommend Shaun:
To invest half of it’s saving in managed growth funds which will give 10.5% return on his
investment.
If he could reduce his end investment plans then Shaun will also have to change his
investment plans in determined approach.
Other
Investment in different portfolio and investment plans depends upon the risk and return of the
investment plan. For instance, if Shaun could take high risk in his investment then it will
increase the overall return but may also result to destruction of

REFERENCES
Altuntas, S., & Dereli, T. (2015). A novel approach based on DEMATEL method and patent
citation analysis for prioritizing a portfolio of investment projects. Expert systems with
Applications, 42(3), 1003-1012.
Bodie, Z. (2013). Investments. McGraw-Hill.
Channon, D. F., & Jalland, M. (2016). Multinational strategic planning. Springer.
Das, I. (2014). Investment Planning Models and Optimal Incentive Design for System
Planners and Investors to Integrate Renewables.
DeFusco, R. A., McLeavey, D. W., Anson, M. J., Pinto, J. E., & Runkle, D. E.
(2015). Quantitative investment analysis. John Wiley & Sons.
Frost, J. J., Sonfield, A., Zolna, M. R., & Finer, L. B. (2014). Return on investment: a fuller
assessment of the benefits and cost savings of the US publicly funded family planning
program. The Milbank Quarterly, 92(4), 696-749.
Hung, D. Q., Mithulananthan, N., & Bansal, R. C. (2014). An optimal investment planning
framework for multiple distributed generation units in industrial distribution
systems. Applied Energy, 124, 62-72.
Rebennack, S. (2014). Generation expansion planning under uncertainty with emissions
quotas. Electric Power Systems Research, 114, 78-85.

Appendix 1 – Future value (FV) calculations
Total fund requirement on retirement 8,90,000.00
Total monthly requirement after
retirement 43,665.00
Investment Portfolio of Shaun
Particulars Amount Weight
Return
(%)
Return
($)
Managed investment fund-High growth 5,34,000.00 60% 10.50% 56,070.00
Fixed deposits 2,22,500.00 25% 5% 11,125.00
Government bond 89,000.00 10% 5% 4,450.00
Australian share fund 89,000.00 10% 10.50% 9,345.00
Yearly Return 80,990.00