Nuwan Perera, aged 43 years, having twins Roshan and Geeth of age 14 years, is a software engineer in a company based in Colombo. His spouse passed away recently. Both his children study in the 8th Grade. He has approached you, a financial planner, for preparing a financial plan for his family. He has shared the following financial information with you:
Nuwan’s Assets & Liabilities (As on 31st March, 2019 unless otherwise specified in foot notes)
Equity MF schemes portfolio: 2,647,000
Balanced MF schemes portfolio: 978,000
Equity shares portfolio: 2,592,000
Gold Jewelry: 217,000
Gold ETF: 321,000
Equity linked savings scheme: 1,570,000
Physical Gold (coins/bars): 1,125,000
Liquid fund scheme: 525,000
Corporate bonds: 1,500,000
Bank account – Nuwan: 103.25
Car loan: 1,007,705 (end June 2019)
Credit Cards: 72,000
Salary Income per month (Rs.)
Basic Salary: 340,000
Transport Allowance: 90,000
EPF Contribution 12%
ETF Contribution 3%
Regular Outgoings Monthly (Rs.)
Household Expenses: 140,000
Car Loan EMI: 117,400
Other cash outflows Annual
Term Plan Insurance premium: 20,516 (Total Cover Rs. 80 lakh)
Endowment Insurance premium8: 80,333 (Sum assured Rs. 2,000,000)
Health Insurance Premium: 27,631 (Annual – 2 policies/ Total cover Rs. 2,000,000)
You, in consultation with Nuwan, have crystallized the following financial goals for his family and the preliminary Roadmap to achieve them:
1. Send both the children to a Boarding School immediately – Outlay Rs. 515,000 per child per annum – for 4 years – To be met year on year basis by investing a suitable plan today.
2. Buy a house – within one year – Outlay of Rs. 75 lakh – Take a loan for 15-year term.
3. Send Roshan for Higher Education abroad. The estimated outlay is Rs. 13,000,000 then for 5 years. To send Geeth for a 4-year course in fashion technology. The current cost is Rs. 1000,000 per year.
4. Retirement Corpus – To be accumulated in 17 years – Corpus to sustain inflation adjusted annuity for 25 years post-retirement.
5. Undertake a trip abroad with both kids on his attaining 53 years of age. The current cost of such trip is Rs. 10 Lakh.
6. To accumulate funds for Geeth’s marriage at her age of 25.
7. Suitable Estate Planning to cover all his physical and financial assets.
Nuwan’s expected life: 85 years
Assumptions regarding long-term pre-tax returns on various asset classes
1. Equity & Equity MF schemes/ Index ETFs: 11.00% p.a.
2. Balanced MF schemes: 9.00% p.a.
3. Bonds/Govt. Securities/ Debt MF schemes: 7.00% p.a.
4. Liquid MF schemes: 5.50% p.a.
5. Gold & Gold ETF: 7.50% p.a.
Assumptions regarding economic factors:
1. Inflation: 5.50% p.a.
2. Expected return in Risk free instruments: 6.50% p.a.
3. Real Estate appreciation: 8.00% p.a.
The above client has approached you seeking assistance with regard to preparing a financial plan. You as professional financial planners draw a plan to meet the said goals. You will,
1) Submit a report communicating your plan (word count = 2,000 +/- 10%)
2) Submit spread sheet supporting your calculations
3) Deliver a presentation on the same report (10 minutes) – you may use PowerPoint presentation and spread sheet.
 Total cost Rs. 1,500,000. Last purchase made in May, 2015
 Invested Rs. 160,000 on 17 July 2016 in the Gold ETF
 investments are stated at their original investment amount
 Received funds amounting to Rs. 9,900,000 from redemption of investments in the name of his wife
 Taken 0n 01st August 2014 at 11.5% p.a. on reducing monthly balance basis for a term of 4 years