BAFI 1014 Personal Wealth Management: A Comprehensive Case Study

This case study provides a financial plan for Janet and Steven Blake, addressing their concerns about after-tax income and expenses. It calculates their after-tax income and savings ratio, suggests measures to reduce their tax liability, and analyzes their investment portfolio for diversification. The solution recommends adjustments to their portfolio to achieve higher returns and calculates the future value of their investments over 10 years. It also outlines a strategy for them to reach their deposit goals more quickly, including additional investment requirements. Furthermore, the case study explains the similarities and differences between small equity funds and large-cap funds for informed investment decisions. Desklib offers this solution and many other resources like past papers and solved assignments to assist students in their studies.

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 the Janet’s and Steven’s after-tax income and savings ratio for the year, while
depicting the measure that could be used by Janet and Steven to reduce their tax liability and
show effectiveness of the strategy:............................................................................................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:............................3
3. Calculating the future value of the investment portfolio for 10 years assuming it will earn a
5% p.a, while explaining the strategy that Janet and Steven could reach their goals more
quickly:.......................................................................................................................................4
Question 2:.................................................................................................................................6
Explaining to the investors regarding the key similarities and difference between small equity
fund and large cap fund:.............................................................................................................6
Reference and Bibliography:......................................................................................................7

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Question 1:
1. Calculating the Janet’s and Steven’s after-tax income and savings ratio for the year,
while depicting the measure that could be used by Janet and Steven to reduce their tax
liability and show effectiveness of the strategy:
Income type Janet Steven
Gross salary 70000 54000
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 taxable income 71000 54410
Tax calculation Janet Steven
1st Tax amount 3,572 3,572
2nd Tax amount 6,906 1,866
Total tax amount 10,478 5,438
Particulars Value
Total remaining income (Surplus) $ 27,010
Net income after tax $ 101,558
Savings ratio 26.60%

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There are different levels of measure, which could be used by the individual is by
reducing their tax liability. In addition, the use of calculation could eventually help in
generating high level of returns from investment. Moreover, the tax exemption is not utilised
in the derivations, for reducing the overall taxable income of the Janet and Steven.
Furthermore, the segregation of the expense conducted by both the individual needs to depict
its nature, which could help in identifying the deduction that will be applied during the
taxation process. Moreover, making charitable donations and other provision could
eventually help in minimising tax liability of the individuals. Therefore, the implementation
of the above strategy could eventually help in minimising the overall taxable income and tax
cash outflow of Janet and Steven. In this context, Chinta, Andall and Best (2017) mentioned
that with the identification of tax deduction individuals can minimise the taxable amount and
retain more savings from their income.
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
The above table relevantly represents the overall investment portfolio of Blake, which
depicts a balanced and diversified investment portfolio. The current portfolio of Blake mainly
consists of conservative financial instruments, which could eventually increase negative
impact from investment. The overall portfolio mainly consists of 66.66% conservative

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financial instruments such as bonds and savings account. Hence, it could be understood that
the current portfolio is adequately diversified, which could generate high rate of retune from
investment.
The current portfolio is mainly conservative in nature, which might be changed into
growth portfolio for generating high level of returns, as needed by Blake. The investment in
Macquarie Group Ltd Shares needs increase from $20,000 to $40,000, while reducing the
exposure in NAB savings Account by $10,000 and Vanguard Bond Fund by $10,000. This
would provide a growth funds for Janet and Steven, which could increase higher rate of
returns from investment (Hay and Beaverstock 2016).
3. Calculating the future value of the investment portfolio for 10 years assuming it will
earn a 5% p.a, while explaining the strategy that Janet and Steven could reach their
goals more quickly:
Particulars Value
NAB savings Account (Janet) $ 20,000
Vanguard Bond Fund (Janet) $ 20,000
Macquarie Group Ltd Shares (Steven) $ 20,000
Current investment $ 60,000.00
Return on investment 5%
Time 10
Future value $ 97,733.68
Particulars Contribution FV
Year 1 $ 5,000.00 $ 8,144.47

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Year 2 $ 5,000.00 $ 7,756.64
Year 3 $ 5,000.00 $ 7,387.28
Year 4 $ 5,000.00 $ 7,035.50
Year 5 $ 5,000.00 $ 6,700.48
Year 6 $ 10,000.00 $ 12,762.82
Year 7 $ 10,000.00 $ 12,155.06
Year 8 $ 10,000.00 $ 11,576.25
Year 9 $ 10,000.00 $ 11,025.00
Year 10 $ 10,000.00 $ 10,500.00
Total Contribution from savings $ 95,043.50
Particulars Amount
Future value of investment $ 97,733.68
Total Contribution from savings $ 95,043.50
Total returns after 10 years $ 192,777.18
Required deposit goal $ 200,000.00
Additional deposit needed $ 7,222.82
Extra investment needed by Blake $ 574.25
The investment of additional $574.25 needs to be conducted by Blake for generating
the required deposit of $200,000. The above calculation relevantly indicates that Blake needs
to investment $574.25 on yearly basis could be conducted for acquiring a total return of
$7,222.82 in 10 years for fulfilling the requirements of deposit goals. The savings acquired

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by Blake could be invested in different financial instruments for generating adequate rate of
returns from investment.

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Question 2:
Explaining to the investors regarding the key similarities and difference between small
equity fund and large cap fund:

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Reference and Bibliography:
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.
Casey, R. and Livergood, T., 2017. The Biggest Trends in Family Wealth.
Chinta, R., Andall, A. and Best, S., 2017. Personal wealth and perceptions of barriers to
women’s entrepreneurship in the state of Alabama: The mediating effects of affordable child
care. International Journal of Gender and Entrepreneurship, 9(3), pp.283-296.
Christensen, D.M., Dhaliwal, D.S., Boivie, S. and Graffin, S.D., 2015. Top management
conservatism and corporate risk strategies: Evidence from managers' personal political
orientation and corporate tax avoidance. Strategic Management Journal, 36(12), pp.1918-
1938.
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.
Hay, I. and Beaverstock, J.V. eds., 2016. Handbook on Wealth and the Super-rich. Edward
Elgar Publishing.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Horan, S.M., 2015. The future of wealth management: Unpicking where the puck is
going. CFA Instittute, pp.1-4.
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,

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NY, 2017 Pp. 274. ISBN 978 1 5017 0551 9. Asian‐Pacific Economic Literature, 31(2),
pp.145-148.
Marcus, A., 2015. The money machine: combining information design/visualization with
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Persuasion Design (pp. 79-161). Springer, London.
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Services, Products, and Markets, p.422.
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Services, Products, and Markets, p.422.
Salampasis, D., Mention, A.L. and Kaiser, A.O., 2017. Wealth Management in Times of
Robo: Towards Hybrid Human-Machine Interactions.
Strike, V.M., Berrone, P., Sapp, S.G. and Congiu, L., 2015. A socioemotional wealth
approach to CEO career horizons in family firms. Journal of Management Studies, 52(4),
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Zorloni, A. and Zorloni, 2016. Art Wealth Management. Springer International Publishing.
Zucman, G., 2014. Taxing across borders: Tracking personal wealth and corporate
profits. Journal of Economic Perspectives, 28(4), pp.121-48.