Financial Planning Case Study: Property Investment for Jane McDonald

This case study analyzes the financial situation of Jane McDonald, a 28-year-old solicitor in Sydney, considering her options for purchasing a property or investing her savings and inheritance. The analysis evaluates the economic and legal contexts, including global and domestic market influences, interest rate movements, and local property market conditions. The study explores the potential impact of these factors on Jane's decision-making process, comparing the benefits of property ownership versus investment in a portfolio of stocks and bonds. It also takes into consideration the factors that affect the market returns and the potential for growth in wealth, as well as the influence of labor market and global economic influences. The case study provides a comprehensive overview of the financial planning considerations for Jane, offering insights into making informed investment decisions based on prevailing economic conditions.

Running head: ECONOMIC AND LEGAL CONTEXT FOR FINANCIAL PLANNING
Financial Planning
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
References........................................................................................................................................6

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Question 1
In order to well analyze the financial position of Jane McDonald it is important to
analyze the financial position for the stated period of time. The annual savings that would be
done by Mrs. McDonald would be dependent on the annual cash flows generated. The key basis
for determining whether she would be able to finance the purchase of her own property would be
on the set of expenses she would be incurring on an annual basis (Tradingeconomics.com 2019).
Yes Jane can purchase the property given the fact that certain points are taken into
consideration and the ability of buying a property could meet the following parameters:
 Global economic influences on the Australian Economy: The global economic
influences is not going to much affect the decision of buying her own property as she
would be purchasing a unit of property rather than undergoing a property construction.

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 Interest Rate Movement: The interest rate movement will determine whether the loan
required by Jane will be beneficial in the loan application taken by Jane. The total savings
and balance amount that is available in the form of inheritance amount and savings
balance can be well used for the purpose of financing the down payment of property
however if interest rate stays volatile the same can affect the monthly EMI for Jane.
 Labor Property Market Conditions: The local property market condition would be
particularly helping Jane determine the prevailing prices and the variability in the prices
of the property market, if the variability would be high then the same would affect the
overall value of the property.
 Labor Market Condition: The labor market condition would be affecting the property
market and not particularly the buying decision of Jane. The rent expenses that is
currently incurred amounting to $33,800 by McDonald will be as a savings to McDonald
and the same amount can be used for the purpose of funding the required capital
investment of purchasing the property.
 Global and Domestic Equity Market Performance: Important consideration such as
total savings available, emergency fund available and the Monthly Payment that would
be required for the loan will be taken into consideration while purchasing the property as
the savings would be invested in the domestic equity market for better growth of wealth.
Question 2
In order to decide whether this is the correct time for buying the property or not, there are
certain factors that needs to be taken into considerations.

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Equity Market Performance: Factors, like the performance of other domestic and global equity
market performance in the economy are important as a slight changes in the equity market
performance could affect the wealth of investors, and availability of finance will be the key
points that would be affecting the decision of purchasing the property.
Global Economic Influence: If the Global Economic Influence prevailing in the economy is
volatile then the same would be affecting the costs associated with the amount borrowed and the
monthly payment that Jane would be making for the property loan (Tradingeconomics.com
2019).
Labor Market Condition: The labor market condition would be affecting the property market
and not particularly the buying decision of Jane.
Local Property Market Conditions: On the other hand, if the property market worsens
whereby the value of property rises due to certain external factors like the policies and
regulations associated with the property market will directly affect the value of property.
Interest Rate: Interest rate in the Australian Economy has been around 1.25% for the year 2019
and the same has fallen considerably in the two-year point of time. The policies followed by the
Australian Government has been towards affordable housing for all with the help of eased rules,
regulations and policies that are associated with the property market. Thus, the above factors
states that currently property investment would be a good idea for Jane McDonald given the
available set of information.

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Question 3
As per the information available Jane is particularly interested in buying a property
however she also has an option of investing the all total savings amount of $230000 in an
portfolio where she can invest in stocks and bond market that could fetch her a sound return on
the amount deposited.
Global and Domestic Equity Market Performance: It was particularly mentioned above in the
investment purpose that Jane could invest in a portfolio as the Australian Stock Market represent
by the ASX 200 fund has provided an annual return of 19.64% since the beginning of 2019. On
the other hand, side the bond the 2-Year Bond Yield in Australia was around 5.75%, the above
set of numbers derived states that Jane could consider investment in portfolio of stocks and
bonds if she particularly is not interested with the purchase of property (Bloomberg.com 2019).

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However, it is important to note that the fund investment that would be considered by Jane
should be considered based on various parameters and factors that affects the market returns.
Interest Rate: Interest rate in the Australian Economy has been around 1.25% for the year 2019
and the same has fallen considerably in the two-year point of time. The same is expected to
remain stable in future times.
Labor Market Condition: The labor market condition can affect the property market if there is
a slight change in the wealth and consumption pattern observed in the economy
Local Property Market Conditions: On the other hand, if the property market worsens
whereby the value of property rises due to certain external factors like the policies and
regulations associated with the property market will directly affect the value of property.
Global Economic Influence: Influences such as policies followed by other economies with
respect to trade with regard to business operations can also affect the property market valuations.

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References
Bloomberg.com. 2019. Bloomberg [online] Available at:
https://www.bloomberg.com/markets/rates-bonds/government-bonds/australia [Accessed 12 Sep.
2019].
Gurufocus.com. 2019. Australia Stock Market Valuations and Expected Future Returns. [online]
Available at: https://www.gurufocus.com/global-market-valuation.php?country=AUS [Accessed
12 Sep. 2019].
Tradingeconomics.com. 2019. Australia Interest Rate | 2019 | Data | Chart | Calendar |
Forecast | News . [online] Available at: https://tradingeconomics.com/australia/interest-rate
[Accessed 12 Sep. 2019].
Tradingeconomics.com. 2019. Australia S&P/ASX 200 Stock Market Index | 2019 | Data | Chart
| Calendar . [online] Available at: https://tradingeconomics.com/australia/stock-market
[Accessed 12 Sep. 2019].