CRKC7006 - Money Management: Interim Assessment Report

This report is an interim assessment on money management, focusing on retirement planning for an individual in the UK. The report explores the concept of a nest-egg, detailing how savings and investments from a monthly salary and a lump-sum inheritance can be used to secure retirement. It considers the high cost of living in the UK, the need for insurance policies, and the importance of long-term financial goals. The report includes a financial plan with a 10-year outlook, detailing salary, cost of living, and savings, and investment scenarios, including fixed deposits and SIPs. The report also references relevant academic sources to support the analysis and recommendations for financial planning. The report highlights the need for financial preparation to secure the financial future of the individual and his dependents.

THE INTERIM
ASSESSMENT FOR
MONEY MANAGEMENT
CRKC7006

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................1
REFERENCES................................................................................................................................4

MAIN BODY
The nest-egg concept is applied where the sum of money is saved from the routine
earnings and is invested in order to secure the retirement of the person and his/ her dependent
members in the family (Maria, 2019). There are various long term goals of the company which
are to be fulfilled and for that the planning and investments are to be made today so that in the
future this sum can be used or the earnings derived from it can be utilized to fulfil the needs and
expectations.
Suppose the current age of the individual is 35 and has to plan for the retirement which is
30 years down the lane, at the age of 65 years. The person wishes to invest the monthly savings
that is there such that the lump-sum amount can be received at the later stage of life. Apart from
the monthly salary there is a lump-sum amount that has been inherited from the ancestors that
shall help in securing for the future needs and goals (What is the Cost of Living in the UK?
2021). The requirements at the time of retirement can be in terms of the medical expenses,
children marriage, purchasing the own property etc. So they need the a regular source of income
as well as a lump-sum amount in the bank to meet any huge requirement.
The average cost of living in UK is very expensive and so the preparations have to be
made accordingly so that the person can take the responsibility of the dependent members in the
family at the time of retirement. In order to protect the spouse from any kind of risks and
uncertainties of life the insurance policies are to be acquired in the names so that post death of
the person the dependents of the family are secured (Anju and Anuradha, 2017).
The monthly average earning of the person is £1950 totalling to approximately earning
£29600 per annum. This is the average salary structure of the medium class salaried employee of
the company who has has completed the basic qualification and is owning the white collar job in
a company. The person having a family of 4 people, self, spouse and 2 school going children.
The other three members are dependent on the single earning member of the family and so the
retirement planning becomes the essential need. The high cost of living in UK leads little amount
left that is being saved which is open for either the short term or the long term investment in the
company. From the averagely earned £1950 as monthly salary, the monthly expenditure is
approximately £1450 which are spent in the monthly food expenses, travelling costs, rent of the
flat etc. The rent of the house is the most costly affair for the business which is to be sorted a
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proper investment which can gain returns in lump-sum through which the house property in the
decent location of UK can be purchased.
The approximately £500 is the monthly savings which can be invested in the various
investment opportunities that are available with the client. The client can go for paying the
monthly SIP in the various funds that belong to the category of the moderate risk that the client is
willing to assume (Vinh, 2018). It can also pay the premium of the life and the medical insurance
policies that are purchased by the client for securing the time of retirement against all odds. The
lump-sum amount that has been inherited by the client from the ancestors shall be either invested
in the fixed deposits or the various growth oriented pension schemes.
In order to plan for the savings and investment plan the client has to define the time
horizon for which the investments are made, the annual rate of return, the average annual rate of
inflation in UK is approximately 1.5 to 1.6% per annum. The rate on the fixed deposits is 0.50%
per year. The time horizon for the client is up- to 10 years from now. The average cost of the
monthly life insurance premium is £9 for the client of the age 35 years.
PARTICUL
ARS 1 2 3 4 5 6 7 8 9 10
Salary per
annum 29600 30044
30494.
66
30952.
08
31416.
36
31887.
61
32365.
92
32851.
41
33344.
18
33844.
34
Less
Cost of living
per annum
-
17400
-
17661
-
17925.
91
-
18194.
8
-
18467.
72
-
18744.
74
-
19025.
91
-
19311.
3
-
19600.
97
-
19894.
98
Savings per
year 12200 12383
12568.
75
12757.
28
12948.
64
13142.
87
13340.
01
13540.
11
13743.
21
13949.
36
Lump-sum
inherited 12000
Interest on
fixed deposits 60 60.3 60.6 60.9 61.21 61.51 61.81 62.11 62.41 62.71
Premium to
be paid on the
insurance
policy -108 -108 -108 -108 -108 -108 -108 -108 -108 -108
SIP to be paid
yearly -300 -300 -300 -300 -300 -300 -300 -300 -300 -300
Total income 11852
12035.
3
12221.
35
12410.
18
12601.
85
12796.
38
12993.
82
13194.
22
13397.
62
13604.
07
2

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REFERENCES
Books and Journals
Anju, K. J. and Anuradha, P. S., 2017. Saving and Investment Behaviour of Information
Technology Professionals–An Empirical Analysis. Asian Journal of Research in
Business Economics and Management. 7(6). pp.71-91.
Vinh, P. D. C. T. H., SAVING AND INVESTMENT (LIQUIDITY) CHINA AND VIETNAM
BEFORE AND DURING COVID-19. Group. 1. p.2.
Maria, H. A., 2019. MONEY SAVING-THE CHANCE FOR A HAPPY OLD AGE. Economic
and Social Development: Book of Proceedings, pp.281-291.
Online
What is the Cost of Living in the UK? 2021. [Online] Available through:
<https://blog.revolut.com/a/cost-of-living-uk/>
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