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Your Financial Planning
Transcript of Your Financial Planning
- Reduce expense
- Balanced saving and investment
- Frequent review
Your Journey of Financial Planning
Why do you need financial planning?
1. Life Protection
Function of Insurance ?
To transfer risk
Common Insurance Products
Critical Illness Insurance
General Treatment (private)
$ 150 - 400
Breast Cancer Treatment
and targeted therapy)
$ 100,000 (for six months)
$ 110,000 - 200,000
Analysis of Financial Position
of people in Hong Kong between age 25 to 30 has a cancer
Critical Illness Insurance
Think one step further...
A health insurance for your beloved children in the future?
A life insurance if one of you quit job to raise your children?
Net Worth Analysis
Net worth 150000 300000 500000 950000
Total cash inflow 490000 420000
Total cash outflow 433350 412890
Spendable income surplus 56650 7110
Reducing some expenses
Evan Ada Joint Total
Affordability of purchasing a property
Apartment: $4 million (~400 sq.ft)
Minimum pay: $400000 (10%)
Instalment term: 30 years
Mortgage interest: $13000 p.a.
Net income for 3 years: $245799
Rent for 3 years: $360000
Debt Ratio 0.57 0.4 0.3
Evan Ada Joint
Debt to Income Ratio 18.34% 1.35%
Basic solvency ratio 0.808 0.411
Liquidity ratio 2.33 0.5 0.53
Evan Ada Joint
Need more cash or liquid assets to finance your expenses
High debt ratio
1. Joint Tenancy
2. Tenancy by the Entirety
2 Questions to Ponder:
1. When will you retire?
2. In what way do you want to live after retirement?
Different answers lead to different planning!
Watch out for high inflation !
30 years later
1. Be well-prepared to future expense
2. Hold non-cash asset if possible
How to Accumulate Funds for Retirement?
Bigger Annuity Pool
grow steadily itself
Get back whenever you want!
- Earning annual dividend
- Sell after 5 years to gain a difference
Some promising stocks:
- A stable yield of return
- Guaranteed bond yield to cover inflation
- Relatively short period (3 years)
Margin FX trading:
Use margin to trade foreign currency as an option.
Buying a call at:
You gain by selling USD and buying EURO. Profit is added to your account.
USD appreciates against EURO:
USD depreciates against EURO:
You lose the difference, which is deducted from your deposit. You may choose to quit (lose all your deposit) or pump money into your account to cover the loss.
Leverage System: multiplied profit = multiplied risk
Be wary of Margin: it may produce risk that you cannot take.
1st Goal: Marriage
Clients' Personal Profile
2nd Goal: Rent an apartment
Rent budget: ~$10,000 per month
Surplus per month: ~$5,300 per month
How to fill up the gap of $4700?
Client's personal profile
1. Eating out: $122 per day
→cut by bringing lunchbox or having dinner at home.
2. Medical expense: →personal and medical expense claimed by insurance
The property is passed automatically to the surviving spouse when a spouse dies.
(After your parents over 55 years old) Dependent Parent and Dependent Grandparent Allowance
Option 1: Purchase
Solution: Use John's gift ($500,000) to purchase immediately
Option 2: Rent
Solution: Reduce expense, save more and invest more
Rent first, buy later
Making a will & creating trust
Why trust or will?
- To manage or disburse asset according to your will after death
What is a trust (living trust)?
- It is created and funded with your asset when you are alive, which designated a successor trustee to take over and manage your asset as your wish.
I'm going to pass out soon?
1. Create & fund a revocable living trust
2. Have a will
3. Double-check who's the beneficiary
(including life insurance)
4. Make any gifts if you wish
A research found that 3.5% of Hong Kong people between 25-30 has a cancer.