Efrelyn Mae G.

Lagmay
BSPHARMA 3

Assignment in Personal Finances

Questions to Answer:

 Once DANIEL becomes a pharmacist, what should be his first financial priority: saving to
purchase a home, paying off his student loan debt, or paying off his credit card debt? What
additional information would you like to have to help Daniel address this question?

 Student debts are difficult to manage, but it may be more beneficial to focus on
future investments. Daniel should make the decision to pay off his education
loans. Student debts limit millions of people's financial progress, and paying off
that debt should always be a priority. At the same time, there will come a point
when your loan balance will be zero, and you will have to set new financial goals.
And, with the power of compound interest at your disposal, the one essential
thing you must have on your side is time. Getting out of debt quickly seems
appealing, but it is not always feasible for everyone. Before you embark on a
strategy to pay off your student loans, assess your overall financial condition.

 What are the advantages and disadvantages of using credit cards to make personal purchases?
 Advantages of credit card
 Buy Now Pay Later: In emergencies, significant expenses, or special occasions,
you don't need to break fixed deposits or take expensive personal loans.
 Safety: In case of internet fraud or theft, debit card money gets directly
debited from your account.
 Reward Points: Credit card companies give attractive benefits in terms of reward
points and cashback.
 Manage Separate Accounts for different purposes: When you submit the bill,
you can easily segregate the tour expenses from your personal expenses.
 Manage good credit history: It may dictate your eligibility for the loan, loan
amount, and even interest rate.

 Disadvantages of credit card

 Overspending: This is human nature, which can be a big problem, particularly when
you purchase online with a credit card.
 Minimum Pay Loop: People fall into the overspending trap and pay interest at a
high rate to credit card companies.
 High-Interest Rate: So, if you fail to pay your bill, you end up paying a lot of
money as the interest rate.
 Hidden charges of credit cards: Even with the ‘lifetime free credit cards’, there
are charges associated which will be activated in specific situations. So, if you
don't read fine points, you pay extra.
 REFERENCES: https://blog.finology.in/finance/advantages-and-disadvantages-of-credit-card

 Assuming that Daniel will practice pharmacy for about 40 years before retiring when would be
the best time for him to start saving for his retirement?

 The answer is simple: as soon as Daniel can. Start saving in his 20s, when he first
leaves school and begins earning a salary. This is because the sooner you start
saving, the more time your money has to grow. Each year's earnings can create
their own gains the next year, a tremendous wealth-building process known as
compounding.

 Approximately how many years’ worth of income should Daniel plan on saving for retirement?

 Retiring as a millionaire is easier said than done, but it isn’t impossible.

According to Fidelity Investments, the rule of thumb is to save 10 times your
salary if you want to retire by the age of 67. If Daniel wish to retire sooner or
later, adjust this amount. Daniel can retire at the age of 62 (the earliest he may
claim Social Security) he will need to save more to make up for an extra five
years without income.

 What percentage of his annual income should Daniel plan on saving for retirement? What factors
influence this decision?

 The final part finds that a savings rate of roughly 15% of income would be
sufficient to meet retirement income objectives. It is a good idea to set aside a
portion of your income each month. If you can afford to, 15% of your annual
salary is advised. Most financial retirement experts recommend that your yearly
retirement income be between 75% and 80% of your pre-retirement income in the
year before you retire.
 The factors on his decision in saving any amount, can lead their retired lives with
no financial challenges. To make sure that they have a constant income and a
secured life.This amount is going to be the backbone of the employee’s retired life.