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Investment and personal finance

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Chinnu Ved

on 25 August 2014

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Transcript of Investment and personal finance

Factors which influence spending patterns
There are a range of factors which may influence Mr Phillips spending patterns. . Below are the factors which may influence Phillips spending patterns. Routines perfomed by Mr Phillips are justified by his lifestyle and the costs are optimised for a single.

-Tax rates
-Going out
-Alternate Transport options

These are a range of factors which may influence his spending patterns. He may choose to take an alternate transport option e.g. bus, bike, etc. His lifestyle varies and he may choose an active lifestyle which may influence his spending patterns via more expense.
Investment Porftfolio
The Investment Portfolio for Mr Phillips is as follows:

Investment Portfolio/goals
The Investment portfolio for Mr Phillips is designated for a single. The costs and savings are that based on an individual:

Settle into the new job
Stay in rent for no more than 5 years
Continue the same job and retire at the age of 70.
Continue adding money to superannuation account
Buy a house in 5 years
Pay off the mortgage in 15 years
Increase the superannuation fund from $10000 per annum to $20000 per annum.
Convert the savings account of $60000 and the rent of $40000 adding up to $100000 per annum into mortgage payoff

Understanding that Mr Phillips will keep the same job, it is estimated that he will have $1 million dollars in his superannuation account to ensure a safe and secure retirement.
Factors which influence saving patterns
Mr Phillips' savings patterns are heavily influenced by the income he is earning. Mr Phillip's transfers half of his income to his savings account to buy a house in the future. The factors below may influence Mr Phillip's savings patterns.

-Minimum Property Deposit
-Property Location

Investment and Personal Finance
People in their 20's who has got their first full-time job
Trevor Phillips is a 25 year old employee who has just received his first full-time job as an associate professor at the University Of New South Wales . Mr Phillips earns a salary of $120,000 per annum, which in turn is a monthly payment of $10000.

Mr Phillips utilises a strict savings plan to buy a house and a car in the future

Mr Phillips uses the majority of his remaining income to rent a unit in Olympic Park, a single storey, modern apartment in the highrise buildings near the shoreside.

To ensure he has enough money to fund for his retirement, Phillips opened a superannuation account, in which he places a fraction of of his remaining money

This is an optimum lifestyle stage as the choice between expenditure and savings of a person at this lifestage is accomodated more to savings and most of the time to buy a house.
Spending Patterns
Mr Phillips utilises half of the income he is earning via his spending patterns i.e. rent, electricity, transport.
The table below shows Mr Phillip's spending patterns.
Available - $120000


Rent - $770 p.w $40000*
Electricity - $250 qrtly $1000*
Phone - $100 qrtly $400**
Transport (train) - $250 qrtly $1000**
Health Insurance $19.50 p.w $1250*
Superannuation $200 p.w $10500*
Groceries $50 p.w $2500** ( * values are per annum)
Recreation $45 p.w $2350** ( ** variable)
Morning Coffee and Bfast $6.50 p.day $2000**

Total = $60000
This shows that from the $120000 available, Mr Phillip's spends $60,000 annually, leaving the remaining $60,000 to go towards savings. These costs are optimised for a single, not a couple and the lifestyle preferences are justified by Mr Phillips daily routine.
These are a range factors which affect Mr Phillips' savings patterns. The majority of his savings is affected by the price of the house Mr Phillips is after.
Savings Patterns
Coincidental with his spending patterns, Mr Phillips also has a savings account in which he diverts half his regular income of $120000 into the savings account. The savings procedure is as follows.

Available +$120000

Savings -$60000


Available +10000

Savings -$5000

Expenditure -$5000

Provided he doesn't lose his job, we can estimate that after working for 5 years, Mr Phillips will have $300000 in his savings account, reaching the non-lender's mortgage price of over 20% of the actual price of $1.5 million.
Of course Mr Phillips will need a home loan as reaching the required price of $1.5 million will require 25 years of constant saving at that price
Investment Portfolio (projected)
Full transcript