Confirmation and Fee Structure for Superannuation Fund
Added on 2019-10-18
11 Pages2994 Words149 Views
|
|
|
Section 1Part aIn the super plan, this Sandy is contributing $ 21250 per annum with the initial balance of $320,000. Sandy has received the bonus of$60,000 which he entirely wants to invest in the superplan. The bonus received by the sender will increase the future value for his retirement from $850,000 to $950,000. Sandy is happy to invest the entire amount because at the age of 54 Sandymight not have a responsibility where she would require large investment. As of now, the monthly expenses of Sandy might be in control; therefore, she might not require her bonus amount. If the entire bonus amount is added to the super plan then Sandy can either increase the future value of her investment or she can receive the same future value of$850,000 by working for lesson number of years.Part bSandy might not be extremely happy about funds getting lock the wait till the condition of release is not mad. If the funds are locked it implies that the liquidity of the Sandy will reduce. The sender will now have less amount of money reserved for the personal emergency is, therefore, Sandy might not be happy if the funds are locked away. However, the decision to lock the funds depends on the additional return provided by the investment scheme in lieu of the reduction in liquidity full stop if a particular investment scheme is providing the attractive Returns then Sandy Might is happy to lock away her funds.The main reasonfor which Sandy might not be happy to block his funds is the incentive for the liquidity. The incentive for the liquidity is defined as the extra return which investor expect for
following his liquid investment. If Sandy is foregoing his liquid funds he will expect higher returns than the investments which are providing the liquidity of the funds. The return expectation of the investor in these cases depends on the benchmarking of similar index that are providing the similar return and the similar liquidity.However, in the practical scenarios investors, other clients are not aware of the Fund Manager orthe financial advisor to explain the investor about the investment options available and suggest him the best investment option which isviableto him.Once the client is convinced that he is getting the best option considering both the liquidity and The returns into the account then he will not hesitate about blockingofhis funds. Hence it is the duty of the fund manager to convince the client and provide him best investment option according to his objectives.Section 2Part aThe rate of return which is used in the super plan in order to calculate The projected future valueof the firms at the retirement for the Sandy is 5%. The gross Returns which are earned on the investment funds in the super plan is expected to be 7%. The gross returns, however, do not consider the inflation into account. The net returns for the investment in the super plan are calculated as the difference between the gross returns and inflation which is 5% In this case.
In this case, inflation is considered because of the net amount of money which is received after 11 years might not value Same as today. Therefore inflation-adjusted returns are calculated in order to consider the effect of inflation.The amount of 950 thousand which is to be received by Sandy is by considering 7% gross return. However the value of $950,000 might not be the same as today therefore net return on theinvestment which is made by Sandy would be 5%.Part BThe time frame which has been assumed in this case for the investment Is known as the Investment Horizon. The investment Horizon for the investment in the super plan is 11 years. This investment Horizon implies that Sandy would be contributing an annual amount for investment in the super funds for the next 11 years. After the end of 11 years, the sender will receive the lump sum amount of$950,000 at his retirement.In this case, we have assumed that after the additional bonus payment of below 60000 the lump sum amount which is to be received by Sandy at his retirement has increased from$850,000 to$950,000. However, it can also be done that by the investment of additional 60000 bonuses Sandy can reduce his investment Horizon and receive the lump sum amount of$850,000 at his retirement.Part CIn this case, Sandy is required to provide his acceptance for the above-mentioned conditions which are required for investment in Superfund.
The sand is required to provide his confirmation on the following given condition. The initial balance which is provided for the investment in the fund by the Sandy is $320,000. The investment Horizon for the investment is 11 years The gross return which is to be earned on the investment by the sand is 7%, however, the net returns after the adjustment of the inflation are 5%. The annual contribution which Sandy is required to make for his investment funds is 20 $1250. The lump sum amount which is to be received by Sandy In normal circumstances is $850,000. However, if the sending decides to invest his bonus of $60,000 now he is expected to receive lump sum amount of 900$15,000 at his retirement. The administration and management feesarecharged on the fund is 0.45% of the portfolio amount and 6.5 Dollars per month. Investment fees charged is 0.5% of the annual contribution. The analyst fees are $1100+ taxes and the new fees which would be charged with the increase account balance would be 3688 dollars.Sandy is required to give his acceptance for the investment in the super fund bywritten communication.Section 3Part aOur major objective here is to plan the investment for sending in the superannuation funds. We would be providing consultancy to the Sandy for the amount of the funds he needs to deposit in order to save his desired amount till the age of retirement. In this planning, the task of Sandy is to plant his expenses and investment in such a manner so that he can save the desired amount of funds which are required to be invested annually in the superannuation fund.
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Real Estate Contemporary Property Investment Planning Assignmentlg...
|13
|3089
|19
Factors to Consider When Investing Superannuation Contributionslg...
|10
|2698
|239
Construction Economics PDFlg...
|18
|6167
|47