Personal Wealth Management - Doc

Running head: PERSONAL WEALTH MANAGEMENT
Personal Wealth Management
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Question 1:.................................................................................................................................2
1. Calculating savings ratio and after-tax income of Janet and Steven for the current year,
while depicting the strategy for reducing tax liability:..............................................................2
2. Reviewing blades investment portfolio and explaining whether they are diversified
adequately, while considering both the investment across different asset classes and making
two different recommendations on how they should change their portfolio:............................4
3. Calculating future value of contribution and investment portfolio after 10 years, where the
interest rate is at 5% p.a, which could help support the deposit required of Janet and Stephen :
....................................................................................................................................................6
Question 2:.................................................................................................................................9
Portraying the key similarities and difference between small equity fund and large cap fund: 9
Reference and Bibliography:....................................................................................................10

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Question 1:
1. Calculating savings ratio and after-tax income of Janet and Steven for the current
year, while depicting the strategy for reducing tax liability:
Income type Amount
Gross Salary- Janet $70,000
Gross Salary- Steven $54,000
Vanguard Bond Fund- Distribution 3.85% (Janet) $770
NAB Savings Account Janet- Interest 2.3%- Janet $230
Macquarie Group Limited- Dividend $2.05 per share- Steven $410
Total income $125,410
Income type Steven Janet
Gross salary $54,000 $70,000
Vanguard Bond Fund- Distribution 3.85% (Janet) $770
Macquarie Group Limited- Dividend $2.05 per share- Steven $410
NAB Savings Account Janet- Interest 2.3%- Janet $230
Total income $54,410 $71,000
Tax calculation Steven Janet
1st Tax amount $ 3,572.00 $ 3,572.00
2nd Tax amount $ 5,658.25 $ 11,050.00
Total tax amount $ 9,230.25 $ 14,622.00

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Particulars Value
Surplus Income $ 27,010
Net income after tax $ 101,558
Savings ratio 26.60%
The above calculated savings ratio relevantly depicts the overall percentage of
savings, which is been conducted by Janet and Stephen after calculating income after tax and
savings over time. In addition, the surplus income after the deduction is relevantly at the level
of $27,010, which is derived after deducing all the expenses incurred by Janet and Stephen.
Moreover, the derivation of the savings ratio would eventually help in understanding the level
of amounts, which could be invested by the individual for generating high level of returns. In
addition, the taxation amount is calculated by using the income tax provision in Australia,
which segregates the income in different level of $37000 and $81000 for deriving the actual
taxable amount of Janet and Stephen. Therefore, with the identification of the taxable income
the overall savings conducted by Janet and Stephen could be identified.
From the overall evaluation of the above calculations that tax liabilities of the couple
could be identified, which could be minimized by including tax exemption listed by the
Australian government. The nature of expenses is not detected in the above case, which is
why the tax exemption is not deducted from the taxable income. The segregation of different
expenses conducted by Janet and Stephen could eventually help in subtracting different level
of deductions from the taxable income to reduce the tax cash outflow. Moreover, the taxable
income can also be reduced with the help of charitable donations conducted by Janet and
Stephen. This would eventually help in reducing the taxable amount of the taxpayers and

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maximizing income retention capacity. Hitt and Duane (2017) mentioned that with the help
of tax reduction measures individuals are able to minimize their tax expenses, while
maximizing the savings on yearly basis.
The current tax amount is relevantly high for Janet and Stephen, which is due to the
non-segregations of all the expenses incurred by the company. Moreover, the use of relevant
segregation of different expenditures could eventually help in identifying the overall tax
exemptions, which could be used in minimising the level of taxable income of Janet and
Stephen. The identification of the tax provisions might eventually allow Janet and Stephen to
improve the level of their savings, after conduiting relevant expenses and tax provisions.
Moreover, the Income Tax Assessment Act 1997 disclosed in Austria relevantly provides the
details regarding the level of tax provisions that needs to be conducted by individuals.
Therefore, with the strategy of utilising the level of adequate tax provisions Janet and
Stephen could eventually reduce their overall tax liability and minimise their tax cash
outflow. On the other hand, Dang, Forsyth and Vetzal (2017) argued that without the
segregation of expenses the individual is not able to detect the overall taxable amount, which
is due to the Australian government.
2. Reviewing blades investment portfolio and explaining whether they are diversified
adequately, while considering both the investment across different asset classes and
making two different recommendations on how they should change their portfolio:
Particulars Value
NAB savings Account (Janet) $ 20,000
Vanguard Bond Fund (Janet) $ 20,000
Macquarie Group Ltd Shares (Steven) $ 20,000

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The current portfolio maintained by Janet and Stephen is relatively diversified and
has all the relevant investment instruments which could generate adequate returns from
investment. In addition, the composition of the portfolio is relatively conservative, where
66.67% of the total portfolio is comprised of risk free asset, why 33.33% comprises of growth
assets. This relatively minimizes the chance of obtaining higher returns from investment, as
the portfolio focuses on fixed returns. Therefore, the current changes in the portfolio could be
conducted where 66.67% will consist of growth stocks while the other 33.33% will consist of
risk free asset for reducing volatility of the capital market. This provision would eventually
allow Janet and Stephen to generate higher rate of return from their investment (Dang,
Forsyth and Vetzal 2017).
The current portfolio that is been maintained by Janet and Stephen is mainly
considered conservative, as it is invested in risk free assets, while the change in the portfolio
could be conducted to improve the level of profits from investment. The conservative nature
of the portfolio could be improved to growth phase, which might help in maximizing the
level of profits from operations. The chances in overall portfolio could be conducted, where
maximum of the returns will be generated from shares. Therefore, the portfolio could
eventually help in generating high level of returns from investment, while increasing the risk
from investment. According to May (2017), investment conducted in different asset classes
allow the investors to minimize the risk from investment, while generating high level of
returns from investment.
The second recommendation that could be conducted by Janet and Stephen is the use
of standard portfolio, where both conservative and growth financial instrument are used in
generating high level of return from investment. In addition, the segregation of the portfolio
could be conducted, where 50% of the investment will be conducted in Macquarie Group Ltd
Shares, which is considered to fall under growth perspective. On the other hand, the second

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50% investment needs to be conducted in NAB savings Account and Vanguard Bond Fund,
which relevantly has no risk from investment. This could eventually have slow growth as
50% of the returns from investment will be fixed due to the investment in risk free assets.
Hence, with the help second recommendation the overall prolific could minimize the risk
from investment and obtain higher rate of returns from investment, as compared to
recommendation one. Hitt and Duane (2017) stated that investors with identified risk and
return measure of stock are able to formulate portfolio, which might reduce risk from
investment and generate higher rate of returns.
3. Calculating future value of contribution and investment portfolio after 10 years,
where the interest rate is at 5% p.a, which could help support the deposit required of
Janet and Stephen :
Particulars Value
Vanguard Bond Fund (Janet) $ 20,000
NAB savings Account (Janet) $ 20,000
Macquarie Group Ltd Shares (Steven) $ 20,000
Current investment $ 60,000
Return on investment 5%
Time 10
Future value $ 97,734
The above valuation mainly represents overall future value of investment conducted
in the current investment of Vanguard Bond Fund, NAB savings Account and Macquarie
Group Ltd Shares. Moreover, the calculation relevantly represents the overall use of 5%
return till 10 years on annual basis, which will generate an overall return of $97,734. The

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returns generated by the current portfolio is relevantly low, as the provisions that is
conducted by the investment is not adequate. Additionally, Alam, Gupta, and Shanmugam
(2017) stated that portfolio could only provide higher rate of returns from investment when
high growth stock with high risk is accumulated in the portfolio of the investor.
Particulars Contribution FV
Year 1 $5,000 $8,144
Year 2 $5,000 $7,757
Year 3 $5,000 $7,387
Year 4 $5,000 $7,036
Year 5 $5,000 $6,700
Year 6 $10,000 $12,763
Year 7 $10,000 $12,155
Year 8 $10,000 $11,576
Year 9 $10,000 $11,025
Year 10 $10,000 $10,500
Total Contribution from savings $ 95,043.50
The above calculation is relevantly conducted to identify the return that will be
generated from contribution investment. in addition, the contribution investment mainly
provides return of $95,043.50, which is not sufficient for supporting the overall deposit
requirement of Janet and Stephen. The contribution conducted by Janet and Stephen on
yearly basis will provide a total return of 5%, which could help in generating a constant
retune from investment.
Particulars Amount

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Required deposit goal $200,000
Total Contribution from savings $95,043
Future value of investment $97,734
Total returns after 10 years $192,777
Additional deposit needed $7,223
Extra investment needed by Janet and
Stephen
$574
The above calculations represent the minimum requirement of additional investment
that needs to be conducted by Janet and Stephen to fulfill the required deposit of $200,000.
The investment of $574.25 on yearly basis would eventually help Janet and Stephen to
generate the required rate of returns from investment. Both the investments in portfolio and
contribution mainly provides a return of $192,777 in 10 years with a total return on 5%, while
the deposit amount was $200,000. Therefore, keeping in mind the deposit amount of
$200,000, an additional investment of $574.25 need to be conducted on every year till the
next 10 years of investment.
The above calculation would eventually help in detecting the extra investment that
need to be conducted by Janet and Stephen for obtaining the level of desired deposit amount.
In addition, the investment can be conducted in different levels, which might be helpful in
improving the level of returns from investment. Therefore, with the implementation of
investment $574.25 could directly allow Janet and Stephen to improve their return generating
capability. Furthermore, with the implementation of the required level of profits would
eventually help in generating high level of returns. In this contest, Takacs et al. (2017) stated

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that with the use of adequate investment options the investors are able to maximizes their
return while minimizing the risk from investment. On the other hand, Nolan, Wu and Low
(2018) criticizes that due to the negative impact from capital market the overall portfolio
losses relevant increases from investment, while hampering the actual investment capital.
Therefore, Janet and Stephen could adequately conducted the extra investment in their
portfolio for improving the level of returns from investment.
Question 2:
Portraying the key similarities and difference between small equity fund and large cap
fund:

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Reference and Bibliography:
Alam, N., Gupta, L. and Shanmugam, B., 2017. Islamic Wealth Management. In Islamic
Finance (pp. 451-473). Palgrave Macmillan, Cham.
Alstadsæter, A., Johannesen, N. and Zucman, G., 2017. Who owns the wealth in tax havens?
Macro evidence and implications for global inequality (No. w23805). National Bureau of
Economic Research.
Beyer, C.B., 2017. Wealth Management Unwrapped, Revised and Expanded: Unwrap what
You Need to Know and Enjoy the Present. John Wiley & Sons.
BURTON, D., 2018. The US Racial Wealth Gap and the Implications for Financial Inclusion
and Wealth Management Policies. Journal of Social Policy, pp.1-18.
Dang, D.M., Forsyth, P.A. and Vetzal, K.R., 2017. The 4% strategy revisited: a pre-
commitment mean-variance optimal approach to wealth management. Quantitative
Finance, 17(3), pp.335-351.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Krongkaew, M., 2017. The Despot’s Guide to Wealth Management: On the International
Campaign Against Grand Corruption by Jason C. Sharman Cornell University Press, Ithaca,
NY, 2017 Pp. 274. ISBN 978 1 5017 0551 9. Asian‐Pacific Economic Literature, 31(2),
pp.145-148.
May, P.J., 2017. Art and Collectibles for Wealth Management. Financial Behavior: Players,
Services, Products, and Markets, p.422.

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Mc Laughlin, L. and Buchanan, J., 2017. Revenue Administration; Implementing a High-
Wealth Individual Compliance Program (No. 17/07). International Monetary Fund.
Nolan, R.C., Wu, T.H. and Low, K.F. eds., 2018. Trusts and Modern Wealth Management.
Cambridge University Press.
Sharman, J.C., 2017. The Despot's Guide to Wealth Management: On the International
Campaign Against Grand Corruption. Cornell University Press.
Steinbach, A.L., Holcomb, T.R., Holmes, R.M., Devers, C.E. and Cannella, A.A., 2017. Top
management team incentive heterogeneity, strategic investment behavior, and performance:
A contingency theory of incentive alignment. Strategic Management Journal, 38(8), pp.1701-
1720.
Takacs Haynes, K., Campbell, J.T. and Hitt, M.A., 2017. When more is not enough:
Executive greed and its influence on shareholder wealth. Journal of Management, 43(2),
pp.555-584.
Uhl, M. and Rohner, P., 2017. The Future of Digital Wealth Management.