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A Case Study on Wealth Management

Research · January 2016

DOI: 10.13140/RG.2.1.4049.4169

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Aimal Mirza
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A Case
Study of
Wealth
Management
Financial Planning

Aimal Mirza
Disclaimer Statement
This financial plan is based specific individual circumstances. It is based on researcher
knowledge developed during course of study and his findings. It may or may not suite
any individual with similar situation. Readers, who would like to use findings in this
study, are advised to consult financial planner/ investment advisor first.

i
Acknowledgment

This project work would not have been possible without the help, support and patience

of my principal supervisor, Dr. Meysam Safari senior lecturer of finance at SEGi

University. Dr. Safari sincerely put all of his effort in helping me and other graduating

batch mates to construct a quality financial planning project in order to best suit chosen

client financial requirement. I hereby express my deepest gratitude and appreciation to

him.

ii
Executive Summary

Wealth management also called financial planning or personal finance is relatively a

new discipline studied at university level. It is also a profession certified by certain
agencies or associations around the world. For instance, in USA this body is called
Certified Financial Planner Board of Standards or CFP board, in UK it is Institute of
Financial Planning, in Malaysia it is Financial Planning Association of Malaysia (
FPAM) and in India it is Financial Planning Standard Board.

The focus of this discipline is wealth management of individuals, who are mostly
wealthy. It is of high demand in countries, where aged portion contribute a big chunk of
population. Because of good standard of living in these societies , life expectancy and
average age is high. The consequences of this fact is that younger population bears
monitory or financial requirement of this portion in terms of high tax payment. Wealth
Management or personal finance attempt to manage individuals cash flow by the time
of its generation in a way so they have enough wealth or cash to spend a desirable
lifestyle after retirement without being a burden on society.

The study of financial planning comprises of areas of knowledge such as investment,

retirement and estate planning, taxation and insurance and risk management. This study
has also attempted to construct a plan to manage wealth for an individual residing in
Malaysia using these areas of knowledge.

As readers were notified in disclaimer statement, this study (hereinafter called financial
plan or plan) is prepared based on requirement of an individual ( hereinafter referred as
client) residing in state of Selangor of Malaysia. It is comprised of five chapters,
wherein a brief literature on concerned topic is also contacted.

This plan involves the detailed review and analysis of all facets of client financial

situation including cash flow and net worth analysis, retirement planning, risk

management and insurance plan, investment plan, tax plan and retirement and estate

iii
plan. It is only through comprehensive analysis that client true financial condition can be

determined and the proper plan can be recommended. Any financial advisor or planner

providing recommendations without addressing all of these aspects for client business

will most likely result in unsuitable recommendations.

As mentioned the first part of plan is on client cash flow and net worth. The component

of client balance sheet is analyzed. The analysis includes calculation of outstanding

amount of home loan and its interest, and comparison of client liability for purchase of

these assets with their actual values. On client cash flow analysis some ratio are

calculated to identify the effect of cash flow on client financial position.

The second part of plan assesses the risks client is currently exposed to and offers some

insurance coverage to mitigate those risks. Plan focuses on client need and requirements

considering following elements:

 Client retirement at Age 60

 Client' spouse life expectancy at age 100

 Client’s daughter education need based on client goal

 Impact of inflation on client expenses

 Replacement of car and other house content in regular interval based on client

requirement

As course of action client is advised to purchase policies recommended in this plan.

Inadequacy and unavailability of protection can pose big risk to client dependents, when

a premature death or permanent total disability occurs.

iv
The third part of plan focuses on a general overview of importance of retirement and

estate planning and the required steps. Further this plan argues the consequences of lack

of these plans. Second part of this plan attempts to identify shortfall client will face on

retirement based on his projected cash inflow and outflow before retirement and

projected expenses to meet his post-retirement requirement. Besides that this plan offers

necessary preparation for estate planning. Both plans offer recommendations,

implementation and the impact of implementation on client existing cash flow.

Forth part of plan offers a progressive investment plan. It is proposed based on client

goals, requirements and risk profile, which requires client to invest RM1 5000 each

month on selected socks. Stocks are selected based on their historical performance,

companies’ financial health and their well-establishment. Each RM 5000 invested on

monthly basis (starting from current month) will grow RM 30,924 after 10 years.

Furthermore, this plan will allow client to enjoy dollar cost averaging. Attempt has been

made to construct a well -diversified portfolio to minimize risk of client capital loss. As

client navigate this plan client come across calculation and the process flow of portfolio

construction so client get more involvement and make better and informed decision.

Fifth part of plan is designed to calculate client tax payable based on client current

situation. Since commencement of client business client have not filed any tax based on

assumption that payment of Zakat fully exempts client tax. However, grant of Zakat is a

religious obligation and Malaysian taxation law only allows a tax rebate equal to the

1
Malaysian Ringgit

v
amount client contributed for Zakat. This plan furthers informs client the consequence of

tax nonpayment and a recommendation on how to minimize client tax payable.

vi
Table of Contents
Disclaimer Statement ..................................................................................................................................
Acknowledgment ...................................................................................................................................... ii
Executive Summary ................................................................................................................................. iii
List of Appendices .................................................................................................................................... x
List of Tables ........................................................................................................................................... xi
List of Figures ......................................................................................................................................... xii
CHAPTER ONE ....................................................................................................................................... 1
1.1 Introduction ................................................................................................................................... 1
1.2 Assessment of Position, Where the Client Stands Financially...................................................... 1
1.2.1 Net Worth Establishment .......................................................................................................... 2
1.2.2 Cash flow .................................................................................................................................. 2
1.2.3 Ratio Analysis ........................................................................................................................... 3
1.2.4 Where the client want to be financially in future ...................................................................... 4
1.3 Information Required for Planning Process .................................................................................. 4
1.4 Consequences of not Having Statement of Cash Flow and Net Worth ........................................ 5
1.5 Clients Cash Flow and Net worth Analysis .................................................................................. 6
1.5.1 Balance Sheet Analysis ............................................................................................................. 7
1.5.2 Client’s Cash Flow Analysis ..................................................................................................... 9
1.6 Recommendation .............................................................................................................................. 12
1.7 What are Next Steps? .................................................................................................................. 12
1.8 A Summary and Observation of First Meeting ........................................................................... 13
CHAPTER TWO .................................................................................................................................... 14
2.1 Introduction ................................................................................................................................. 14
2.2 Steps Required for Insurance Planning ....................................................................................... 14
2.3 Consequences of not Having Insurance Planning ....................................................................... 14
2.4 Client Risk Assessment............................................................................................................... 15
2.5 Life Insurance Need Assessment ................................................................................................ 15
2.5.1 Replacement of Income .......................................................................................................... 15
2.5.2 Mortgage Loans and Tax Obligations ..................................................................................... 16
2.5.3 Maintenance of Dependence ................................................................................................... 16
2.5.4 Funeral Requirement ............................................................................................................... 16

vii
2.5.5 Life Insurance Plan ................................................................................................................. 16
2.6 Health Insurance Plan ................................................................................................................. 18
2.6.1 Health Background ................................................................................................................. 18
2.7 Property Insurance Plan .............................................................................................................. 19
2.8 Other ........................................................................................................................................... 20
2.9 Summary and Recommendations................................................................................................ 20
CHAPTER THREE ................................................................................................................................ 22
3.1 Introduction ................................................................................................................................. 22
3.2 Steps Required for Retirement Planning........................................................................................... 22
3.2.1 Defining Client Goals ................................................................................................. 22
3.2.2 Gathering Information................................................................................................. 23
3.2.3 Analysis....................................................................................................................... 23
3.2.4 Evaluating Options and Examining Asset Allocation ................................................. 23
3.2.5 Choosing Income Solutions ........................................................................................ 23
3.3 Steps Required for Estate Planning ............................................................................................. 24
3.4 Consequences of not Having Retirement and Estate Plan .......................................................... 24
3.5 Client Retirement Planning ......................................................................................................... 24
3.5.1. Recommendations ................................................................................................................... 26
3.5.2. Implementation of Plan ........................................................................................................... 27
3.6. Estate Planning............................................................................................................................ 28
3.6.1. Recommendation .................................................................................................................... 28
CHAPTER FOUR ................................................................................................................................... 30
4.1 Introduction ................................................................................................................................. 30
4.2 Client Investment Plan ................................................................................................................ 31
4.3 Portfolio Construction ................................................................................................................. 33
4.3.1 Stock Return and Beta............................................................................................................. 33
4.3.2 Correlation matrix .......................................................................................................................... 34
4.3.3 Standard Deviation.................................................................................................................. 35
4.3.4 Covariance .............................................................................................................................. 35
4.3.5 Portfolio Optimization ............................................................................................................ 36
4.3.6 Rationale for Weightage Proposal ................................................................................................. 37
4.4 Recommendations ....................................................................................................................... 37

viii
CHAPTER FIVE .................................................................................................................................... 39
5.1 Introduction ................................................................................................................................. 39
5.2 Steps Required For Taxation Planning For Sole Proprietorship Business .................................. 39
5.3 Information Needed For Process................................................................................................. 40
5.4 Consequences for not Having Tax Planning ............................................................................... 40
5.5 Client Taxation Planning ............................................................................................................ 41
5.6 Recommendation ........................................................................................................................ 43
References ............................................................................................................................................... 44
Appendix B .......................................................................................................................... 49
Appendix C .......................................................................................................................... 50
Appendix C.1 ....................................................................................................................... 52
Appendix C.2 ....................................................................................................................... 54
Appendix D .......................................................................................................................... 55
Appendix D.1 ....................................................................................................................... 59

ix
List of Appendices
Page

Appendix A Client Introduction and information on current financial position 47

Appendix B Effects of Different Event on Pre-retirement Expenses 50

Appendix C Post-retirement Projected Expense 51

Appendix C.1 Saving Growth Projection 53

Appendix C.2 Pre- retirement Income Expense Projection 55

Appendix D Historical stock price and return 56

Appendix D.1 Client Risk Profile 60

x
List of Tables

Page

Table 1 Client Net Worth 7

Table 2 Liability Analysis 8

Table 3 Calculation of Interest Payable 9

Table 4 Statement of Cash Flow 10

Table 5 Client Health Condition 19

Table 6 Monthly, Annual Return and Beta 35

Table 7 Stock Correlation Matrix 36

Table 8 Stock Standard Deviation Matrix 36

Table 9 Stock Covariance matrix 37

Table 10 Asset Allocation 37

Table 11 Rental statutory income 42

Table 12 Calculation of Chargeable Income/ Tax Payable 43

xi
List of Figures
Page

Figure 1 Graphical presentation of Income-Expense during expected

lifetime 12
Figure 2 Graphical display of annual expenses 18
Figure 3 Graphical presentation of post retirement expense projection 26

Figure 4 Graphical presentation of investment value at end of year 28

Figure 5 PETRONAS Historical share price 32
Figure 6 Dutch Lady Historical Share Price 32
Figure 7 DIGi.com Historical Share Price 33
Figure 8 TASCO Bhd Historical Share Price 33
Figure 9 Allianz Malaysia Berhad 33
Figure 10 Graphical presentation of stock prices and Market index 35
Figure 11 Graphical Presentation of asset allocation 37

xii
 CHAPTER ONE

CLIENT CASH FLOW AND NET WORTH ANALYSIS

1.1 Introduction

The foremost step in preparation of a financial plan is that the financial planner should

be clear about his/her relationship with the client. This relationship is pure professional

and professionalism requires planner to observe certain ethics. The utmost objective is

helping client achieve his/her financial goals. This requires the planner to educate client

what a goal is. Only based on a clear goal planner can develop an ideal plan. A good

planner would see clients’ future in his own eyes. A clear goal must be SMART

Specific- Goal should be within financial resources

Measurable: Goal should be measurable in term of monitory

Achievable: Goal should not be mere a dream

Realistic: Keep in view the current situation not too ambitious

Time-bound: Within a period of time e.g. short term. Med-term or long term

Based on SMART goal planner has to follow 2 steps initiate a financial process.

1.2 Assessment of Position, Where the Client Stands Financially

Assessment of current financial position of client further requires 3 other steps:

1
1.2.1 Net Worth Establishment

Net worth is a useful tool to measure clients’ financial progress from year to year. Client

net worth is essentially a grand total of all his/her assets minus his/her liabilities. Client

should use his/her net worth to track the progress from year to year, and hopefully see it

improve. By improvement, we mean growth of net worth much bigger in due course of

time

1.2.2 Cash flow

Client cash flow is his/ her income verses spending in a period of time. In a situation

where income exceed expenditure client has positive saving planner should advise client

to improve that saving. In a situation where expenditure exceeds income the saving is

negative. A negative saving means more liability and a weak net worth. In such a

situation the immediate goal would be to break even income and expense. A surplus net

cash flow should be divided in different portions; each portion should serve a purpose.

The objective of allocation of each portion for a purpose is:

1. Secure an individual financial independence when there is no income: This

statement means that individual should use a portion of income to support

investment. Investment is necessary to accumulate enough wealth for a

financially secure retirement.

2. A portion of saving should be allocated for emergency fund.

3. Saving should also support children education.

2
The above point requires client to observe financial discipline. Client should come up

with a budget. The amount allocated for one purpose in budget should not be used for

other purposes.

1.2.3 Ratio Analysis

After identifying, net worth and cash flow pattern. Financial standing of client can be

further analyzed by calculating some simple ratios such as:

Liquidity Ratio: Liquidity ratio gauges client ability to meet expenses, when he stops

earning.

Current Ratio: An analysis to identify to what extend clients’ current asset cover his/her

current liability

Leverage Ratio: Represents the percentage of debt in clients net worth

Saving Ratio: Identifies the percentage of saving in clients income

Asset to Debt Ratio: This ratio compares the asset accumulated by client against his

existing liability.

Solvency Ratio: this ratio compares client net worth against assets he has accumulated

Debt Service Ratio: this ratio indicates how client is comfortable to pay his debt with his

current

Application of ratio analysis techniques provides valuable insight in to specific strength

and weakness of client financial situation. Once client understand his/her financial

health, the next course of action would be further improvement of financial health.

3
1.2.4 Where the client want to be financially in future

In this step planner and client should agree on clients’ future goal. Why planner

agreement? At the beginning the characteristic of a goal was described. Therefore, in

financial planning point of view any daydream cannot be a goal. Typical financial goal

for an average/common individual would be:

 Payment of credit card loan

 Settlement of car loan

 Settlement of house loan

 Children education

 Lifestyle and financial independence in certain age

The above goals should be sequenced and prioritized, because not all of them can be

handled in one time. For instance a short term goal would be settlement of credit card as

it bears higher interest. Therefore, in a short term client financial position will be that

s/he is under no credit card liability. When client succeed to accumulate enough wealth

in long-term for retirement his /her position would be a financially independent retiree.

1.3 Information Required for Planning Process

At the very beginning stage it is important to know the client. The principle of knowing

client requires planner to obtain as much information as possible. Initially the most

important information required are identity, mailing address, age, marital status,

occupation, contact number and etc. For instance to identify net worth, information such

asset (cash and cash equivalent, car, house even some intellectual property) are needed.

4
In order to analyze cash flow, information such as income(s) and expenses are required.

This information is close ended and can be obtained by developing questionnaires and

fact finders. Whereas, qualitative and even some unstated information such as client

character, psychology and personality are also of high importance. Serving in a noble

profession, planner should care about its integrity. Furthermore, with a quality client

planner can establish a comfortable long term relationship. Information regarding client

quality can be obtained by posing open-ended questions in interview.

Net worth is a clear representation of client financial health. Net worth well tell the

client that his/ her current standing might not be desirable and it needs serious

improvement. A well-managed cash flow will help client make net worth more

desirable. And finally analyzing ratio make client aware of the fact that to what extend

he and his family is protected, when an unwanted event such as fractional

unemployment, disaster, disability occurs.

1.4 Consequences of not Having Statement of Cash Flow and Net Worth

Statement of cash flow and net worth are integral part of personal finance. Lack of cash

flow analysis will lead to an unclear financial situation and prediction of future position

will be hard to predict. Also lack of cash flow makes it difficult to plan future. Similarly,

lack of net worth means lack of information on past and present financial strength.

When, there is no net worth statement individual cannot determine which part of his

financial needs improvement. Improvement in net worth is possible when cash flow is

5
improved. Therefore both net worth and cash flow are important part of personal finance

thus, interrelated.

1.5 Clients Cash Flow and Net worth Analysis

Net worth summary bellow provides a snap shot showing a financial situation at a

certain point in time. It includes what client own (assets), what client owe to creditors

(liabilities), and the net value or difference between the two (net worth). In simple terms,

the net worth statement shows how much money would be left if everything client

owned was converted into cash and used to pay off client debts.

Table 1 Client Net worth

Client& His Spouse Balance Sheet

Client Spouse Total

RM RM RM
Assets
Liquid Asset
Current A/C 10,000
Saving A/C 150,000
Fixed Deposit 200,000
Jewelry 40,000
Total Liquid Asset 400,000
Fixed Asset
House1 1,200,000
House2 250,000
House3 250,000
House4 120,000
Car 1 12,000
Car 2 15,000
Car 3 22,000

6
 Car 4 80,000

Total Fixed Asset 1,949,000

Total Asset 2,349,000

Liability
House 1 loan 137,008
House 2 loan 68,717
House 3 loan 88,398
294,123
interest payable 69,764
interest payable 35,660
interest payable 78,605
184,029
Total Liability 478,152
Net Worth 1,870,848

1.5.1 Balance Sheet Analysis

Based on information client provided on interview the reason why client require

maintaining high liquidity is that for past few years client business growth rate has

become very low. For some time client have been considering to start another business.

Therefore, investment of available cash does not suit client requirement. However

opening another CD could be an alternative. In client current saving account statement it

is noticed that that the dividend2 paid semiannually even sometimes is near to 5%.

Therefore it is advisable not to convert saving account to CD. The reason is that by the

time client require cash and liquidate CD client banker will not pay the promised

interest, meanwhile client deprive the dividend currently client get on saving account

balance.

2
Client saving account is an Islamic banking product, in Malaysian Islamic banking jargon the
profit paid on current account on basis of profit and loss sharing is called dividend.
7
Table 2 provides an analysis of client liabilities.

Table 2 Liability analysis

Current Loan Date

Value Amount Rate EAR Tenure Purchased Actual Cost
House 1 250,000 180,000 5.90% 6.06% 25 Y 1/1/2004 344,623
House 2 250,000 90,000 6.00% 6.17% 25 Y 1/1/2004 173,958
House 3 120,000 90,000 6.00% 6.17% 25 Y 1/1/2013 173,958

As seen in above table the value of house number one and three is lower than the amount

of loan to be paid. Client are advised to shop around other bank and see if refinance of

loans is possible either in lower rate or shorter period of time. For termination of

existing loan agreement and refinance of new mortgage client might be charged loan

termination and processing fee, therefore, client are further advised to consult to a

financial advisor for a cost benefit analysis. Owning four cars does not necessarily add

strength to client net worth.

Client loan agreement does not provide enough information, however below table

provides client with an insight on the amount of principle and interest payable

outstanding on each loan

Table 3 Calculation of Interest Payable

Principle Final settlement

Outstanding Interest Payable date
House 1 loan 137,008 69,764 1/1/2029
House 2 loan 68,717 35,660 ½/2029
House 3 loan 88.398 78,605 1/1/2038

8
1.5.2 Client’s Cash Flow Analysis

Cash out flow is pretty well- managed; the only discretionary expense is charity. As far

as this charity is not to an approved institution, client are not entitled to any tax

deduction. Therefore, client are advised to consider reschedule to reduce this expense.

Expenses highlighted in cash flow are subject to current inflation rate in Malaysia,

which is 3.5%.

Table 4 Statement of Cash Flow

Mr. and Mrs. Roslan Combined Cash Flow statement

Income

Profit form Business 360,000 Car Insurance -

Rent 28,800 Car No1 600

Total Income 388,800 Car No2 540
Expenses Car No3 504
Mortgage Repayment Car No4 420

House No1 13,800 Road Tax 6,720

House No2 6,960 Petrol 12,682
House No3 6,960 Food and Drink 19,023
Quit Rent 3,000 Cloth 3,805
Assessment 3,720 Holidays 6,341
Charity 12,000
Water 420 0thers 10,000
Gas 1,268
Electricity 720 Total Expense 113,531
Telephone 1,000 Net Cash Flow 275,269
Health Insurance -
Self 2,160
Wife -
Daughter 888

9
Looking at client net cash flow it can be easily judged that it is quite healthy; however

some ratios are calculated to further analyze client financial position.

Liquid Asset 360,000

1. 𝐿𝑖𝑞𝑢𝑖𝑑𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = Monthly Expense = 113,531 = 39 𝑇𝑖𝑚𝑒𝑠
( )
12

This ratio indicates that in case unexpected emergency takes place, which at result loss

of client income considering current life standard client liquid asset will support client

for 3 years.

liquid Asset 360,000

2. 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = Current Laibility = 29,183.393 = 12.34 𝑡𝑖𝑚𝑒

This ratio indicates that for each ringgit payable within one year, client have 12.34

ringgit to pay.

Total Debt 184,029

3. 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 = Net Worth = 1,870,848 = 26%

The above ratio indicates that only 26% of client net worth is the money client owe.

A B A/B
One year
Remaining Time for loan/interest settlement obligation
House 1 loan 137,008 14 9,786.29
House 2 loan 68,717 14 4,908.36
House 3 loan 88,398 24 3,683.25
Interest payable 69,764 14 4,983.14
Interest payable 35,660 14 2,547.14
Interest payable 78,605 24 3,275.21
Total 29,183.39

10
 Monthly Saving 22,939
4. 𝑆𝑎𝑣𝑖𝑛𝑔 𝑅𝑎𝑡𝑖𝑜 = = 32,400 = 0.71
Gross Income

𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 2,349,000

5. Asset to Debt Ratio = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 = = 4.91
478,152

The ratio indicates that client asset is almost 5 times bigger than client liabilities

𝑆ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝟐𝟗,𝟏𝟖𝟑.𝟑𝟗

6. Debt Service Ratio = = =0.075
𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 388,800

The above ratio indicates that only 7.5% of client income is spent to repay client

monthly loan installment

𝑛𝑒𝑡𝑤𝑜𝑡ℎ 1,870,848
7. 𝑆𝑜𝑙𝑣𝑒𝑛𝑐𝑦 𝑅𝑎𝑡𝑖𝑜 = = = 0.796
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡 2,349,000

The above ratio indicates that 79.6 % of client total asset is client net worth

The ratio indicates that client save 71% percent of gross income, however it does not

include any compulsory saving such as retirement contribution fund.

Client current financial standing is strong enough however, a projection of client cash

flow for another 68 years- a time horizon that client are expected remain alive indicates

that client accumulated savings will not meet committed expensed after client retire .

Client intend to retire at age of 60 this will happen in 2041.

400000
300000
200000
100000
0
-100000
-200000
-300000

Figure 1 Graphical presentation of Income-Expense during expected life time

11
In order to prepare a comprehensive plan client agreed that following goals are of high

significance sequenced in terms of time from top to bottom

 Mitigate of serious risks through proper insurance policies as immediate concern.

 Minimizing burden of debt within 5-10 years as med-term goal.

 Child education

 Retirement.

1.6 Recommendation

As mentioned throughout this plan 4 cars are not value add to client financial position.

In my opinion, only 2 cars are needed for client family. Client are recommended to sale

out 2 additional cars and consider the proceeds toward investment that gives yield and

leads to client wealth maximization. Client are also recommended to consider client

house loan refinance for a shorter period of time. The reason behind this advice is that

upon client retirement all of client liabilities are settled. Client are further advised to

allocate client net cash flow to different portions and maintain each portion for

achievement of goals such as retirement planning, child education fund, emergency fund

and etc.

1.7 What are Next Steps?

 Understanding client requirement enables financial planner to construct a reliable

comprehensive plan. Therefore, client expectations on following events are

highly required.

12
  In a situation, when client undergo premature death or permanent disability

occurrence what will be client concern for client dependents?

 To what extend client are willing to support client daughter with her education?

 Client stated that client intend to retire at age of 60 what life style client want to

maintain on post retirement?

1.8 A Summary and Observation of First Meeting

Our first meeting was over all convincing to both of us. Client looks to be hardworking

since has aggressively accumulated wealth within past 10 years. Apparently the sole

source of wealth he has managed to accumulate is income from retail business.

Therefore one can agree he is a hard worker because retail business is more labor

intensive than capital. On our first meeting I managed to obtain some information

necessary for analysis of his net worth and cash flow studies. Obviously, client cannot

be expected to disclose all information required I should allow some time for him.

However for a comprehensive and reliable plan I will need much more information

which I am hopeful to get on our next meetings.

When I advised client not to transfer the money from saving account to fixed deposit

that was a good start toward gaining his trust. Furthermore, when I bring in his

knowledge that some of houses he purchased are worth less than what he is liable

another step toward building a relationship based on trust. In clients’ cash flow

statement amount of RM 6,720 as road tax is to be scrutinized in detail I will contact this

issue when I start developing taxation planning for client.

13
 CHAPTER TWO

INSURANCE PLANNING

2.1 Introduction

In every comprehensive plan, insurance planning plays a vital role because insurance

planning is one of the important tools to mitigate financial risk by transferring those

risks to an insurance company, though it is not a simple process, insurance plan should

be designed to client needs and a best available policy should be recommended. Further,

it requires planner to consider steps to achieve this objective.

2.2 Steps Required for Insurance Planning

The process requires planner to follow the steps as below:

 Gather information about client

 Analysis of this information to assess the risk (s) client is exposed to

 Recommendation of right type, amount and policy

2.3 Consequences of not Having Insurance Planning

Life is full of uncertainty and risks such as premature death, permanent disability

occurrence, loss of income due to above-mentioned reasons, suffering critical illness

while client are not financially prepared to tackle that and so forth. In current busy life
14
all of us are open to these risks unless a comprehensive insurance plan is held. Lack of

such a plan will cause unnecessary financial loss and undergoing a hardship.

2.4 Client Risk Assessment

Ms. Roslan and client health insurance policies suite client requirements, whereas no

insurance policy is purchased for Mrs. Roslan. Client car insurance includes third party

liability; however, amount of 7500 per passenger is inadequate. Client do not hold

adequate fire insurance policy. Client workers health can pose a big risk to client

business meanwhile; client convenient stores are not insured against fire. A biggest risk,

which client are exposed to, is inadequacy of life insurance. Currently the life insurance

policy client hold has a value of RM 20,277. However, client current health insurance

policy meets client requirement, client and Mrs. Roslan need to be protected after age of

70- the time that most of health insurers do not offer policies.

2.5 Life Insurance Need Assessment

2.5.1 Replacement of Income

Client current income has given shape to client life style a sudden change due unpleasant

event will cause client and client dependent an anxious suffer. One purpose of life

insurance is to offer a replacement to client current income.

15
2.5.2 Mortgage Loans and Tax Obligations

Mortgage loan almost RM 500k on account of home loan, also payment of state and

municipal taxes on properties such as quit rent and door tax are primary obligations

that must be secured in case of client premature death.

2.5.3 Maintenance of Dependence

This plan assumes that Mrs. Roslan will live till age 100. Based on this assumption she

requires 68 years financial support. Client plan to support Ms. Roslan up to her PhD

completion this support will last for another 25 years.

2.5.4 Funeral Requirement

As a matter of fact, funeral requirement needs to be arranged as in a long run this

arrangement might be costly.

2.5.5 Life Insurance Plan

In order to come up with a detailed life insurance plan first of all annual expenses at

different point of time have to be identified. The purpose is to see what will be family’s

requirement in case untimed death or total permanent disability occurs to client and how

the cash outflow pattern will be. Besides regular dependent requirement, the insurance

value offered in this plan includes following elements:

16
  Retirement at age of 60.

 Purchase of health insurance, which accommodates critical illness for Mrs.

Roslan

 Purchase home fire insurance which covers public liability

 Support of Ms. Roslan to get her PhD this will happen, when she is 25, when

everything else assumed equal.

 Upon retirement, client will maintain only one car.

 Upon retirement client will not contribute to charity currently client do.

Client stated that mortality age in client family background has been 60-65. To be in a

safe side this plan assumes that client will leave another 66 years.

Based on above agreement and assumption a table is prepared (see appendix I) to

identify annual expenses at up to 2040- the time client will retire. In annual expense

2.8% inflation is incorporated

200,000
180,000
160,000
140,000
120,000
100,000
80,000 Annual
60,000 Expense
40,000
20,000
-
2016 2018 2020 2022 2024 2026 2028 2031 2033 2035 2037 2039

Figure 2 Graphical displays of annual expenses:

17
Based on above, client need life insurance of RM 3.52 million to accommodate desired

requirement. A whole life insurance will cost client an annual expense of RM 55 K.

2.6 Health Insurance Plan

2.6.1 Health Background

Due to a lot of work in business client have not been able to do exercise yet client health

is normal client do not complaint from serious illness. In client family nobody has

suffered any type of critical illnesses as well. Spouse is also in a normal health

condition.

Table 5 Client Health Condition

Question Answer

Client Spouse
Height 1.73 m 1.65m
Weight 67kg 62 kg

Current health condition Good Good

Smoking No No
Decline of previous insurance application No No
Current medical condition Normal Normal

Consultation to anybody for anxiety, stress or depression No No

Problem with blood pressure, hearth, cholesterol, cancer, diabetes. No No

Consultation to any specialist for medical condition No No

Participation in hazardous activities No No

18
Client require a single-bed room in case of hospitalization. Client current policy is

suitable for his requirement it covers RM 450 per day for as long as client require

hospitalization, for hospital room and board plus all other benefits.

2.7 Property Insurance Plan

This insurance plan offers coverage for loss or damage to buildings and its contents. By

purchasing this coverage client will minimize the loss due to occurrence of following

hazards

1. Fire, Lightning, Thunderbolt and Subterranean Fire

2. Bursting or Overflowing of Domestic Water Tanks, Apparatus and/or Pipes

3. Theft by actual, forcible and violent means

4. Explosion

5. Earthquake and Volcanic eruption

6. Aircraft and other aerial devices and/or articles dropped therefrom

7. Impact with any of the buildings by any road vehicles or animals not

belonging to or under the control of the Insured or any member of his family

8. Hurricane, Cyclone, Typhoon, Windstorm

9. Flood but excluding loss or damage caused by subsidence or landslip

For the 3 other houses that client have leased out on monthly rent client are advised

to public fire insurance policy to mitigate risk of tenant claim due to above risks.

19
2.8 Other

Client are recommended not overlook insurance need for client business currently

none of convenient stores are insured against fire. Meanwhile client have hired

around 10 workers; these workers health issues can be potential expense that can

have a negative impact on current cash flow.

2.9 Summary and Recommendations

This plan assumes that no significance change occurs in client life, however this is not

the fact, human life is full of uncertainties and changes. Therefore client are highly

recommended to review this plan regularly and consult with financial planner as any

change can have a big impact on cash flow. Below is a highlight of recommended

course of action

 Purchase of whole life insurance for client himself for the value recommended.

Whereas, premium will be very high due to high amount of life insurance

coverage client are advised to purchase whole-life insurance with an investment

element. The benefit for this action is that return client get out of this saving can

be used for payment of premium. Further client have the option to choose

investment vehicle. Client are recommended that to select blue chips stock at the

beginning after ten years shift investment to bond.

 Purchase of health insurance for spouse, which includes critical illness.

 Purchase of fire insurance both for house and convenient stores.

20
 Some of insurance company at a remarkable discount offer family health plan,

client are further advised to consider such a plan.

 Group health insurance for worker

 Purchase of liability insurance. This policy is recommended because client

customer may be poisoned while consuming items client offer in convenient

store. This matter may become a potential risk as the customer may take a legal

action against client.

 Increase of damage limit for passenger from RM 7’500 to RM 10’000

21
 CHAPTER THREE

RETIREMENT AND ESTATE PLANNING

3.1 Introduction

Why retirement and Estate planning? Retirement planning is the planning one does to

be prepared for life after paid work ends, not just financially but in all aspects of life.

The non-financial aspects include such lifestyle choices as how to spend time in

retirement, where to live, when to completely quit working, etc. A holistic approach to

retirement planning considers all of these areas.

Estate planning Making sure most of the estate is transferred to beneficiaries and paying

the least amount for administration and legal process for transfer of properties to heirs.

3.2 Steps Required for Retirement Planning

In order to prepare an ideal retirement planning 6 steps are required to process.

3.2.1 Defining Client Goals

Identification of capital required to meet post retirement expenses based on life style

chosen.

22
3.2.2 Gathering Information

Information such as date of birth, client expected retirement year, client current

retirement savings and any other benefits client expect to receive in retirement (such as

EPF or a pension plan).

3.2.3 Analysis

Analysis should include a review of client overall asset allocation, expected income

during retirement and an estimate of how long savings may last.

3.2.4 Evaluating Options and Examining Asset Allocation

If the analysis reveals that client is able to achieve income goals, financial planner

should help client evaluate options. For instance, client can review the potential impact

adjustment on expenses, boosting his/her savings level, adjusting investment allocations

to meet personal needs and tolerance for risk or working a little longer.

3.2.5 Choosing Income Solutions

Once client current situation and retirement goals have been evaluated, planner should

suggest retirement income solutions that make sense for client.

23
3.3 Steps Required for Estate Planning

Following steps are required to process estate planning

 Write of Will

 Appointment of executor

 Identifying beneficiary in Will

3.4 Consequences of not Having Retirement and Estate Plan

Lack of a retirement planning will cause uncertainty of how much money may be

needed in retirement to cover post retirement expenses. Also income sources and

retirement assets available to help fund client retirement cannot be identified. As a

consequence retiree will suffer frustration that could have been avoided long time before

retirement. Lack of adequate estate planning can cause undue financial burdens to loved

ones, unnecessary freeze of asset that can provide welfare to survivors.

3.5 Client Retirement Planning

Client plan to retire at age 60 and maintain current life style. The only retirement

requirement is to keep a full time attendant. Further client want to use 3 properties rental

income after retirement. There is a high probability that after age of 70 client and Mrs.

Roslan will not get health insurance. Since there is a high inflation rate on health care

services client agreed to consider RM 6,000 annual expense initially on health care after

24
age of 70, however this expense will be subject to an estimated inflation4 of 2.8%.

(Calculation shown in appendix)

In order to come up with capital required for retirement this plan offers post retirement

cash flow budget. (Please refer to appendix I)

Based on this budget fund required to support client and dependent on post retirement is

RM 5.23 Million.

Accumulation of wealth upon client retirement is presented (see appendix II) based on

projected cash inflow and outflow. Client cash inflow has a declining trend based on

client assumption of business negative growth.

On the ground of above, there will be a shortfall of RM 1.26 million to meet the post

retirement requirement.

300000

250000

200000

150000
Savings
100000

50000

0
2033
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032

2034
2035
2036
2037
2038
2039
2040

Figure 3 Graphical presentation of post retirement expense projection

4
Average inflation rate based on ten years historical movement
(http://www.tradingeconomics.com/malaysia/inflation-cpi)

25
 3.5.1. Recommendations

In order to achieve the target (accumulation of 1.26 Million upon retirement) client

require a proper retirement plan. This plan will have a big impact on client existing cash

flow. Client projected financial position allows client to be aggressive investor for

another 12 years. Client can choose a portfolio construction that up to 70 percent is

invested in stock and 30 percent in low return vehicle investment such as bond. Within

this period (from 2014-2026) a tactical asset allocation is suitable to maximize the

wealth. In tactical asset allocation portfolio composition shifts from high return- high

risk asset to low return-low risk asset based on market performance. I would also advise

client to contribute some amount of money to an approved Private Retirement Scheme.

This scheme besides providing an opportunity for client to save some money for client

retirement it will also enables client to claim an annual of RM 3000 of tax relief

(www.ppa.my/prs/about-prs/prs-scheme-features). Besides like EPF all income

generated out of PRS are exempted from tax.

Like an investment plan client have the choice to choose the degree of risk and return.

However I would still advise client to create a composition of fund client want to place

which PRS provider. This composition should be comprised of three portions. Each

portion should be allocated form high risk-high return to low risk low return. For the

purpose of capital preservation, client are recommended to shift whole portfolio to low

risk asset such as bond and bank deposit after 2026.

26
 3.5.2. Implementation of Plan

Upon client agreement to the above recommendation there will be a decrease in client

existing cash inflow (please refer to appendix III). Based on this implementation the

amount of RM 100k client allocate for investment for another 12 years is slightly

aggressive as compare to proceeding 15 years. Reason being client cash flow in first 12

years is healthy enough to support this fund allocation. Initial composition of client

portfolio, which gave a rate of 8%, is a combination of 30 % stock and 70 % bond. This

plan proposes 12 year maintenance of such a portfolio. For the next 6 years all portfolio

shifts from stock-bond combination to wholly bond investment. For proceeding 8 years

client investment will shift to fixed deposit in order to preserve client capital required for

post- retirement expenses.

6000000
5235298.878
5000000

4000000

3000000
Investment
Value at End of
2000000 Year

1000000
140400
0

Figure 4 Investment value at end of year

27
 3.6. Estate Planning

Normally when ones’ age is maturing s/he is more prepared for death. However, this

Estate Planning focal point is premature death. Being a Muslim client biological

relationships are potential heirs to client wealth. However I advise client to pay more

attention to spouse and daughter future. for this reason I encouraged client to write will

and especially decide about 1/3 of client wealth, which is at client discretion and will

not be distributed by Faraied.

In order to avoid lengthy probate this plan proposes client to write a will and appoint and

trustee or executor due to following reasons.

 Arrangement of funeral: This will reduce the burden of funeral arrangement on

dependent.

 To protect client asset against creditors claim: Since client owes banks almost

500K in occasions of sudden death property will be protected as long as it

remain in trust custody. Furthermore, a trust will be in a better position to clear

clients’ property tax obligations.

 client family as beneficiary will get 2/3 of his wealth, another benefit of wealth is

that client can decide about another 1/3 of client wealth and specify it in will

3.6.1. Recommendation

Although a Muslim deceased wealth distribution is predefined in Islamic Law of

inheritance, yet in Malaysia under the Probate & Administration Act in case there is no

Will or Wasiat deceased asset will remain frozen for a long time with court and will go

28
through a lengthy legal process. Therefore client are strongly recommended to write a

will and appoint a trustee.

Client can also give power of attorney to client trusted one to manage client business.

This will avoid problem of intestacy and difficulty to obtain letter of administration. It is

important that client chose an adult and trusted successor and avoid any executors to

manage client business. I further advise client to provide training to client trusted one so

after client death s/he is skilled enough to manage client business and provide the

proceeds to client immediate family members. This course of action will avoid any

unplanned liquidation of business which might result a huge loss.

29
 CHAPTER FOUR

INVESTMENT PLANNING

4.1 Introduction

Like other financial planning, investment planning has also 5 steps to initiate. These

processes are as followings:

1. Determine the future goal, which on its ground investment is required.

2. The amount that is to be invested initially or periodically should be decided

3. Risk tolerance should be identified

4. Diversification of investment or constructing portfolio

5. Selection of the marketplace for investment.

The information required for investment planning is included in steps mentioned above,

Such as amount which is going to be invested, risk tolerance of client, time horizon and

market place which suites client preference.

The consequences of not having an investment planning would be decline in the value of

money kept in cash, due to inflation, thus reduction in purchasing power. Therefore,

taking risk for an investment decision is offset by the risk of losing value of on hand

money. It should be noted that risk of inflation is much higher than risk, which

investment poses.

30
4.2 Client Investment Plan

Design of this plan offers client a progressive investment scheme. The objective is to

maximize the value of client future cash flow. Based on this plan a schedule of

investment is prepared which requires client to invest RM 5000 each month on 5 stocks

chosen for client investment portfolio (please refer to charts bellow labeled with

companies name). These 5 stocks are chosen after some research of market and as client

note on the bellow charts they have performed quite will within past 5 years

Figure 5PETRONAS Historical share price Source: Bursa Malaysia

Figure 6 Dutch Lady Historical Share Price Source: Bursa Malaysia

31
 Figure 7 DIGi.com Historical Share Price Source: Bursa Malaysia

Figure 8 TASCO Bhd Historical Share Price Source: Bursa Malaysia

Figure 9 Allianz Historical Share Price Source: Bursa Malaysia

Each stock within proposed portfolio has low volatility. The riskiness of proposed

stocks suites client risk profile (please refer to risk tolerance sheet in appendix). Besides

low volatility, all these stock have grown constantly. It is predicted that they will

32
perform well for following years. For instance Petronas is leading fuel energy refining

company that has government support to a big extend. Dutch lady has considerable

market share in dairy milk industry; meanwhile this industry is growing well recently.

By offering unique services DIGi com outstands itself in telecom industry. TASCO

(Trans-Asia Shipping Corporation) has a monopolistic position in freight transportation

market in Malaysia with good reputation in the region. Allianz is also a well- established

financial and investment company. This company has many subsidiaries, which are

insurance companies. This is a German origin company.

4.3 Portfolio Construction

The attempt has been made to diversify client portfolio to a possible extend. The

proposed diversification ensures that client will not lose all of capital even when the

whole market does not perform well.

4.3.1 Stock Return and Beta

Monthly stock return calculation is based on 5 years monthly return. All selected stocks

betas are bellow one. For calculation of beta KLCI return is used as market index.

PETRONAS has a negative beta; inclusion of a negative beta in portfolio reduces the

risk of losing all capital when the whole market does not perform well.

33
 Table 6 monthly, annual return and Beta

Monthly Annual
Return Return5 Beta
PETRONAS 1.245% 16.01% -0.09114
Dutch Lady 1.824% 24.22% 0.162383
DIGi.com 2.697% 37.62% 0.169788
TASCO
Bhd 1.658% 21.81% 0.191045
Allianz 1.399% 18.14% 0.202413

60
50 Petronal
40 Dutch Lady
30
20 DIGi.com
10 TASCO
0
Allianz
KLCI

Figure 10 Graphical presentations of stock prices and Market index

4.3.2 Correlation matrix

Correlations between stocks are less than one and very close to zero. This indicates that

stock price movement has almost zero effect on each other. Therefore, it is not likely

that the whole capital in portfolio is lost, unless portfolio faces a market crash.

5
Annual Return= (𝟏 + 𝐌𝐨𝐧𝐭𝐡𝐲 𝐑𝐞𝐭𝐮𝐫𝐧)𝟏𝟐 − 𝟏 (Multi-criteria Portfolio Management, Xidonas,
P 2012 pp113.)

34
 Table 7 Stock Correlation Matrix
PETRONAS Dutch Lady DIGi Com TASCO Allianz

PETRONAS 1 0.21 0.19 0.06 0.18

Dutch Lady 0.21 1 0.33 0.18 0.19

DIGi Com 0.19 0.33 1 0.3 0.04
TASCO 0.06 0.18 0.3 1 0.03
Allianz 0.18 0.19 0.04 0.03 1

4.3.3 Standard Deviation

As stated earlier attempts has been made to select stock with low volatility and high

possible return. The following format of stock standard deviation display is required to

calculate all stocks covariance:

Table 8 Stock Standard Deviation Matrix

PETRONAS 4.00%
- - - -
Dutch Lady 6.60%
- - - -
DIGi Com 7.07%
- - - -
TASCO 7.33%
- - - -
Allianz 8.53%
- - - -

4.3.4 Covariance

Likewise, covariance matrix is required to calculate optimal portfolio.

35
 Table 9 Stock Covariance matrix

PETRONAS Dutch Lady DIGi Com TASCO Allianz

PETRONAS 0.0016029 0.000565 0.000551 0.000176 0.0006086

Dutch Lady 0.000565 0.0043497 0.001552 0.000867 0.0010844

DIGi Com 0.0005507 0.0015523 0.004995 0.001528 0.0002626
TASCO 0.0001756 0.0008666 0.001528 0.005367 0.0001593
Alliaz 0.0006086 0.0010844 0.000263 0.000159 0.0072674

4.3.5 Portfolio Optimization

This plan offers client following allocation of fund for each stock:

Table 10 Asset Allocation

Current
Stock Number of share
Return Risk Weightage Price Allocation Purchased
PETRONAS 1.245% 4.004% 58.77% 24.70 2,938 119
Dutch Lady 1 1.824% 6.595% 14.82% 46.96 741 16
DIGi Com1 2.697% 7.068% 10.31% 5.74 515. 90
TASCO 1.658% 7.326% 8.34% 2.56 417 163
Allianz 1.399% 8.525% 7.76% 12.03 388 32
100.00%
E[r]Portfolio
Monthly 1.53%
VAR Portfolio 0.11%
SD Portfolio 3.39%

Weitage Petronas 58.77%

Dutch Lady 14.82%
DIGi Com10.31%
TASCO 8.34%
Alliaz 7.76%

Figure 11 Graphical Presentation of asset allocation

36
4.3.6 Rationale for Weightage Proposal

As it can be noted in above table PETRONAS stock price has the lowest risk and return,

however stock price in quite high, therefore 58.77% of money is allocated to purchase a

high number of stocks. Similarly, with 8.34% weightage purchase of a high number of

TASCO share is possible. Nonetheless, the case about Allianz stock is not the same,

reason being this stock risk is very high as compared to rest of stock. The proposed

allocation of fund allows client to enjoy dollar cost averaging as well.

Portfolio is expected to yields 1.69 million, while the total amount invested during this

period is 600K.

(1 + 1.53%)120 − 1
FV of Annuity = 5000x ⌊ ⌋ = 1.694 million
1.53%

5000x120 = 600K

4.4 Recommendations

The proposed investment is suitable for next 10 years after 10 years client are

recommended to shift 50% of portfolio to low risk investment vehicle such as bond.

Upon client retirement the whole portfolio should shift to low risk investment vehicle.

Client are further recommended to regularly monitor client portfolio performance and

within holding period consult investment expert for possible changes in asset allocation

or any other course of action. As per analysts view the amount of fuel deposit will be

37
depleted after a decade or a decade and half. This matter will have highly impact

Petronas Company. Malaysian population will grow to 36 Million in 2030

(http://www.euromonitor.com/malaysia-in-2030-the-future-demographic/report) a 24.13

% growth is expected. Population growth means market growth and this growth will

allow market to grow. Such information have considerable impact on stock performance

of client portfolio, therefore, client are recommended to proactively update clientself on

financial situation. Alternatively the option of unit trust is available for investment,

however our recommendation in our plan to invest directly and not use of investor

services is based on following justifications.

 Amount invested unit trust will remain locked to a certain amount of time where

premature withdrawal will cause decline in value of portfolio as this investment

is not liquid enough

 Client have no control to choose investment vehicle rather it is decided to by

investment manager

 Investment in unit trust is inconvenient and is subject to many terms and

conditions

38
 CHAPTER FIVE

TAX PLANNING

5.1 Introduction

Tax planning is a legitimate mean for reduction of tax liability on individual in

compliance with tax law. However, it should not be confused with tax evasion. Tax

evasion is violation of tax law and is illegal. Tax planning helps save money thus

increase in wealth through legal means, whereas, tax evasion has consequences of severe

penalties.

5.2 Steps Required For Taxation Planning For Sole Proprietorship Business

Ultimate purpose of tax planning is to reduce chargeable income. In order to arrive to

chargeable income following steps are required.

1. Identification of gross income

Less: deduction

2. Adjusted income

Less: Capital Allowance

Add: balancing charge

3. Statutory income

Add: other business income sources

39
 Add: Non-business income sources

Less: brought forward business Losses

4. Net statutory Business Income/Aggregate income

Less: current year’s business losses (adjusted loss)

Permitted donations

5. Total income

Less personal relief (Individual only)

6. Chargeable income/Income tax payable

If individual, then check against Progressive Tax Rate (Res) or 26% (Non Res)

If company, then 25% (Non Residence & Res with paid up capital > 2.5m) or

20% & 25% (Residence with paid up capital = < 2.5m depending on amount of

chargeable income)

5.3 Information Needed For Process

Required information for tax planning are presented in steps required for this process

5.4 Consequences for not Having Tax Planning

Lack of knowledge about tax law may result to either

1. Non-compliance with tax law , the consequence explained at intro,

2. Or payment of extra tax and not enjoying available legal tax relaxation that

results to unnecessary reduction in wealth.

40
5.5 Client Taxation Planning

Client statutory income equals to client gross income from client business as long as

there is not information/ non availability of deductible expenses, capital allowance and

balancing charge. On client business statutory income only statutory income from client

rental is added as there are no other business income sources and brought forward losses

from previous years. Client rental statutory income is calculation is presented in table

10:

Table 11 rental statutory income

Statutory Rental Income Payment Receipt

House Rent 28,800

Quit rent 3000

Assessment 3,720

6
Interest on House Loan 27,720

Fire Insurance NIL

Statutory Rental Income NIL

6
Jayapalan Kasipillai, A Guide to Malaysian Taxation, 2nd Edition, Ch 10 Page 310
41
 Table 12 Calculation of Chargeable Income/ Tax Payable
Calculation of Chargeable Income/ Tax Payable

Business Statutory Income 360,000

Add: Rental Statutory Income NIL

Less: B/F Business Loss NIL
Aggregate Income 360,000
Less: Current Year Business Loss NIL
Less: permitted donation NIL
Total Income 360,000
Less: Personal Relief
Self 9,000

Wife 3,000
Child 1,000

Health Insurance 6,000

Chargeable Income 341,000

first 250,000 52,850

91,000 @24.5% 22,295

Tax Payable Before rebate 75,145

Rebate
Zakat 35000

Tax payable 41,615

42
5.6 Recommendation

First of all client are strongly recommended to file tax and make attempt to clear client

tax payable. Payment of Zakat does not fully exempt client tax. Nonpayment of tax is

considered tax evasion and has unpleasant consequences such as, penalty, fine and event

imprisonment. Secondly contribution to saving/investment scheme ( Private Retirement

Scheme, recommended in retirement planning) allow client to claim a deduction of RM

3000 in each year of assessment, meanwhile this plan contribute to client wealth

maximization. In client cash flow statement there is an outflow of RM 5000 per year for

donation, as client grant this donation to a political party client are not allowed to claim

deduction. Therefore client are further recommended to grant this fund to an approved

institute for donation. Upon client agreement to clear client tax client are advised to seek

a tax planner help to minimize client tax payable to possible extend. Minimization of tax

will requires client to keep record of every transaction. A seven years record keeping is

also required by law.

43
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Edition/dp/074322376

Trieschmann, J., Gustavson, S. and Hoyt, R. (2001). Risk management & insurance. 1st
ed. Cincinnati, Ohio: South-Western College Pub
Wade D, P. (2014). Journal Schools of Thought on Retirement Income. [online]

Onefpa.org. Available at: http://www.onefpa.org/journal/Pages/APR14-2-

Schools-of-Thought-on-Retirement-Income.aspx [Accessed 06 Jun. 2014].

45
 Appendix A

Client Information

1. Client personal detail

Name: Mohd Shaid Bin Rosli
Age: 34

Family Members:
Spouse: Mrs. Rolsi
Age: 32
Child: Ms. Rosli
Age: 2
Employment Detail

Mr. Rosli: Sole proprietor Fantastic Resources

Annual Income: profit from Business 360K
Mrs. Rosli House wife
2. Asset

Date of
Cost Value
Purchase

House1-
1/1/2000 600,000 1,200,000
Residence

House2 1/1/2004 180,000 250,000

House3 1/1/2004 90,000 250,000
House4 1/1/2013 90,000 120,000
Car 1 12,000
Car 2 15,000
Car 3 22,000
Car 4 80,000
House Content 40,000

3. Bank Account
Current (not interest) 10,000
Saving (up to 5 %) 150,000
FD (3.5%) 200,000

46
4. Loan

Principle Final settlement

Outstanding Interest Payable date
House 1 loan 137,008 69,764( 5.9%) 1/1/2029
House 2 loan 68,717 35,660(6.00%) 1/2/2029
House 3 loan 88.398 78,605(6.00%) 1/1/2038

No Credit Card

5. Retirement
Expected Retirement Age: 60
Life expectancy after retirement: 40Y
Post retirement Expected Income: 28K from rent

6. Insurance
Type: Coverage Policy Insurer
Life 20,277 HLA Cash Promise Hong Leong
Health 10,000 Health Insurance Etiqa
Disability No
House Insurance No

Car Insurance: 7500 Comprehensive Etiqa

Automobile policy
Passenger and 3rd
Party Coverage

7. Estate
No Will

47
 8. Annual Expense:

Mortgage
Repayment
House No1 13,800 Telephone 1,000
House No2 6,960 Health Insurance
House No3 6,960 Self 2,160
Quit Rent 3,000 Wife -
Assessment 3,720 Daughter 888
Car Insurance -
Water 420 Car No1 600
Gas 1,268 Car No2 540
Electricity 720 Car No3 504
Car No4 420
Road Tax 6,720
Petrol 12,682
Food and Drink 19,023
Cloth 3,805
Holidays 6,341
Charity 12,000
0thers 10,000

48
 Appendix B
Effect of different event in client pre-retirement expense

Clients' Childs’' Annual

Year Milestone
Age Age Expense
2014 34 2 113,531
2015 35 3 120,771
2016 36 4 122,045
2017 37 5 123,354
2018 38 6 129,700 Child School Enrollment
2019 39 7 131,084
2020 40 8 132,507
2021 41 9 133,907
2022 42 10 135,473
2023 43 11 137,019
2024 44 12 188,608 Car Replacement
2025 45 13 140,241
2026 46 14 141,920
2027 47 15 143,647
2028 48 16 145,421
2029 49 17 126,485 Settlement of 2 House loan
2030 50 18 114,641 Child graduate/post -graduate studies
2031 51 19 116,568
2032 52 20 118,550
2033 53 21 120,587
2034 54 22 172,682 Car Replacement
2035 55 23 124,834
2036 56 24 126,160
2037 57 25 128,435 Child finishes studies
2038 58 108,814 Settlement of 3rd house loan
2039 59 111,218
2040 60 113,690 Retirement of Client

3,521,892

49
 Appendix C
Post Retirement projected Expenses

Retirement
Requirement
Total
Client Spouse Normal Full time
Year Income Medical Retirement
Age Age Expense Attendant
Requirement
2041 61 59 28,944 70,943 1,086 - 43,085
2042 62 60 29,089 73,171 1,180 - 45,262
2043 63 61 29,234 75,461 1,282 - 47,509
2044 64 62 29,380 127,815 1,393 - 99,827
2045 65 63 29,527 80,235 1,513 - 52,221
2046 66 64 29,675 82,723 1,644 - 54,692
2047 67 65 29,823 85,280 1,786 - 57,243
2048 68 66 29,972 87,909 1,940 - 59,877
2049 69 67 30,122 90,612 2,108 - 62,597
2050 70 68 30,273 93,390 2,290 - 65,407
2051 71 69 30,424 96,246 2,488 20,000 88,309
2052 72 70 30,576 99,182 2,702 21,000 92,308
2053 73 71 30,729 102,201 2,936 22,000 96,408
2054 74 72 30,883 155,303 3,189 23,000 150,610
2055 75 73 31,037 108,493 3,465 24,000 104,921
2056 76 74 31,192 111,772 3,764 25,000 109,344
2057 77 75 31,348 115,143 4,089 26,000 113,884
2058 78 76 31,505 118,608 4,443 27,000 118,545
2059 79 77 31,663 122,170 4,826 28,500 123,833
2060 80 78 31,821 125,832 5,243 29,000 128,254
2061 81 79 31,980 129,597 5,696 29,500 132,813
2062 82 80 32,140 133,467 6,188 33,429 140,944
2063 83 81 32,301 137,445 6,722 34,365 146,232
2064 84 82 32,462 191,535 7,303 35,328 201,703
2065 85 83 32,625 145,739 7,934 36,317 157,365
2066 86 84 32,788 150,061 8,619 37,334 163,226
2067 87 85 32,952 154,504 9,364 38,379 169,295
2068 88 86 33,116 159,071 10,172 39,454 175,581
2069 89 87 33,282 163,766 11,051 40,558 182,093
2070 90 88 33,448 95,757 12,006 41,694 116,008
2071 91 89 33,616 98,749 13,042 42,861 121,037

50
2072 92 90 33,784 101,825 14,169 44,062 126,272
2073 93 91 33,953 104,988 15,393 45,295 131,723
2074 94 92 34,122 158,239 16,722 46,564 187,403
2075 95 93 34,293 111,161 18,167 47,867 142,902
2076 96 94 34,464 114,596 19,736 49,208 149,075
2077 97 95 34,637 118,128 21,441 50,585 155,517
2078 98 96 34,810 121,758 23,292 52,002 162,242
2079 99 97 34,984 125,490 25,304 53,458 169,268
2080 100 98 35,159 129,327 27,490 54,955 176,613
2081 99 35,335 152,351 29,864 56,493 203,374
2082 100 35,511 154,246 32,444 58,075 209,254
5,234,077

51
 Appendix C.1
Saving growth projection

Amount Investment Investment

Income Net Rate
Business Total Total Allocated Tax Value at Value at
Year from Cash of
income Income Expense to Relief Beginning End of
Rent Flow Return
Investment of Year Year
2014 28,800 360,000 388,800 113,531 60,000 3,000 218,269 130,000 12% 145,600
2015 28,800 360,000 388,800 120,771 60,000 3,000 211,029 205,600 12% 230,272
2016 28,800 360,000 388,800 122,045 60,000 3,000 209,755 290,272 12% 325,105
2017 28,800 360,000 388,800 123,354 60,000 3,000 208,446 385,105 12% 431,317
2018 28,800 360,000 388,800 129,700 60,000 3,000 202,100 491,317 12% 550,275
2019 28,800 360,000 388,800 131,084 60,000 3,000 200,716 610,275 12% 683,508
2020 28,800 360,000 388,800 132,507 60,000 3,000 199,293 743,508 12% 832,729
2021 28,800 300,000 328,800 133,907 60,000 3,000 137,893 892,729 12% 999,857
2022 28,800 300,000 328,800 135,473 60,000 3,000 136,327 1,059,857 12% 1,187,040
2023 28,800 300,000 328,800 137,019 60,000 3,000 134,781 1,247,040 12% 1,396,684
2024 28,800 300,000 328,800 188,608 60,000 3,000 83,192 1,456,684 12% 1,631,486
2025 28,800 300,000 328,800 140,241 60,000 3,000 131,559 1,691,486 12% 1,894,465
2026 28,800 240,000 268,800 141,920 60,000 3,000 69,880 1,954,465 12% 2,189,001
2027 28,800 240,000 268,800 143,647 60,000 3,000 68,153 2,249,001 8% 2,428,921
2028 28,800 240,000 268,800 145,421 60,000 3,000 66,379 2,488,921 8% 2,688,034
2029 28,800 240,000 268,800 126,485 60,000 3,000 85,315 2,748,034 8% 2,967,877
2030 28,800 240,000 268,800 114,641 60,000 3,000 97,159 3,027,877 8% 3,270,107
2031 28,800 180,000 208,800 116,568 30,000 3,000 65,232 3,300,107 8% 3,564,116
2032 28,800 180,000 208,800 118,550 30,000 3,000 63,250 3,594,116 8% 3,881,645

52
2033 28,800 180,000 208,800 120,587 30,000 3,000 61,213 3,911,645 5.00% 4,107,227
2034 28,800 180,000 208,800 172,682 10,000 3,000 29,118 4,117,227 5.00% 4,323,089
2035 28,800 180,000 208,800 124,834 20,000 3,000 66,966 4,343,089 5.00% 4,560,243
2036 28,800 120,000 148,800 126,160 5,000 3,000 20,640 4,565,243 5.00% 4,793,505
2037 28,800 120,000 148,800 128,435 5,000 3,000 18,365 4,798,505 5.00% 5,038,431
2038 28,800 120,000 148,800 108,814 5,000 3,000 37,986 5,043,431 5.00% 5,295,602
2039 28,800 120,000 148,800 111,218 5,000 3,000 35,582 5,300,602 5.00% 5,565,632
2040 28,800 120,000 148,800 113,690 5,000 3,000 33,110 5,570,632 5.00% 5,849,164

53
 Appendix C.2
Pre- retirement income expense projection

Rental Business
Year Income Income Total Income Expense Savings
2014 28,800 360,000 388,800 113,531 275,269
2015 28,800 360,000 388,800 120,771 268,029
2016 28,800 360,000 388,800 122,045 266,755
2017 28,800 360,000 388,800 123,354 265,446
2018 28,800 360,000 388,800 129,700 259,100
2019 28,800 360,000 388,800 131,084 257,716
2020 28,800 360,000 388,800 132,507 256,293
2021 28,800 300,000 328,800 133,907 194,893
2022 28,800 300,000 328,800 135,473 193,327
2023 28,800 300,000 328,800 137,019 191,781
2024 28,800 300,000 328,800 188,608 140,192
2025 28,800 300,000 328,800 140,241 188,559
2026 28,800 240,000 268,800 141,920 126,880
2027 28,800 240,000 268,800 143,647 125,153
2028 28,800 240,000 268,800 145,421 123,379
2029 28,800 240,000 268,800 126,485 142,315
2030 28,800 240,000 268,800 114,641 154,159
2031 28,800 180,000 208,800 116,568 92,232
2032 28,800 180,000 208,800 118,550 90,250
2033 28,800 180,000 208,800 120,587 88,213
2034 28,800 180,000 208,800 172,682 36,118
2035 28,800 180,000 208,800 124,834 83,966
2036 28,800 120,000 148,800 126,160 22,640
2037 28,800 120,000 148,800 128,435 20,365
2038 28,800 120,000 148,800 108,814 39,986
2039 28,800 120,000 148,800 111,218 37,582
2040 28,800 120,000 148,800 113,690 35,110
3,975,708

54
 Appendix D
Historical stock price and return

ALLIANZ
PETRONAS Gas Dutch Lady DIGI.COM TASCO BHD MALAYSIA
BERHAD
Adj Adj Adj Adj Adj
Date Close Return Close Return Close Return Close Close
6/2/2014 24.7 46.96 5.74 2.56 12.03
5/1/2014 24.5 0.008163 46.6 0.007725 5.42 0.059041 2.52 0.015873 11.24 0.070285
4/1/2014 23.1 0.060606 46.4 0.00431 5.48 -0.01095 2.48 0.016129 10.28 0.093385
3/3/2014 23.39 -0.0124 46.88 -0.01024 5.33 0.028143 2.5 -0.008 10.24 0.003906
2/3/2014 23.2 0.00819 46.96 -0.0017 5.09 0.047151 2.19 0.141553 11.58 -0.11572
1/1/2014 22.98 0.009574 46.58 0.008158 4.57 0.113786 2.05 0.068293 12.05 -0.039
12/2/2013 23.77 -0.03324 46.64 -0.00129 4.84 -0.05579 2.09 -0.01914 12.07 -0.00166
11/1/2013 23.45 0.013646 47.48 -0.01769 4.75 0.018947 2.07 0.009662 10.38 0.162813
10/1/2013 24.1 -0.02697 45.54 0.0426 4.82 -0.01452 2.05 0.009756 10.28 0.009728
9/2/2013 21.62 0.114709 46.03 -0.01065 4.69 0.027719 1.95 0.051282 10.46 -0.01721
8/1/2013 19.65 0.100254 44.95 0.024027 4.53 0.03532 1.98 -0.01515 9.93 0.053374
7/1/2013 20.33 -0.03345 45.12 -0.00377 4.44 0.02027 2.07 -0.04348 9.93 0
6/3/2013 20.39 -0.00294 46.05 -0.0202 4.54 -0.02203 2.03 0.019704 9.07 0.094818
5/1/2013 20.72 -0.01593 47.22 -0.02478 4.53 0.002208 2.03 0 9.41 -0.03613
4/1/2013 18.94 0.093981 45.36 0.041005 4.39 0.031891 2.02 0.00495 8.5 0.107059
3/1/2013 18.25 0.037808 46.13 -0.01669 4.38 0.002283 1.92 0.052083 8.31 0.022864
2/1/2013 17.59 0.037521 44.58 0.034769 4.33 0.011547 1.9 0.010526 7.35 0.130612
1/1/2013 17.82 -0.01291 41.01 0.087052 4.63 -0.06479 1.9 0 7.22 0.018006
12/3/2012 18.75 -0.0496 45 -0.08867 4.98 -0.07028 1.89 0.005291 6.99 0.032904

55
11/1/2012 17.67 0.061121 44.39 0.013742 4.55 0.094505 1.89 0 7.04 -0.0071
10/1/2012 18.82 -0.06111 47.9 -0.07328 4.96 -0.08266 1.8 0.05 6.86 0.026239
9/3/2012 18.25 0.031233 41.42 0.156446 4.93 0.006085 1.88 -0.04255 6.14 0.117264
8/1/2012 18.61 -0.01934 40.75 0.016442 4.49 0.097996 1.95 -0.0359 6.52 -0.05828
7/2/2012 17.63 0.055587 35.48 0.148534 4.1 0.095122 1.94 0.005155 5.85 0.11453
6/1/2012 17.15 0.027988 33.75 0.051259 3.92 0.045918 1.9 0.021053 4.95 0.181818
5/1/2012 16.39 0.04637 31.68 0.065341 3.69 0.062331 1.82 0.043956 4.81 0.029106
4/2/2012 15.76 0.039975 32.02 -0.01062 3.67 0.00545 1.84 -0.01087 4.43 0.085779
3/1/2012 15.82 -0.00379 32.38 -0.01112 3.69 -0.00542 1.78 0.033708 4.61 -0.03905
2/1/2012 15.78 0.002535 28.34 0.142555 3.66 0.008197 1.63 0.092025 4.83 -0.04555
1/3/2012 14.73 0.071283 24.29 0.166735 3.54 0.033898 1.45 0.124138 4.81 0.004158
12/1/2011 14.28 0.031513 22.12 0.098101 3.47 0.020173 1.4 0.035714 4.66 0.032189
11/1/2011 12.27 0.163814 22.69 -0.02512 3.15 0.101587 1.39 0.007194 4.56 0.02193
10/3/2011 12.17 0.008217 19.22 0.180541 2.54 0.240157 1.33 0.045113 4.52 0.00885
9/2/2011 12.06 0.009121 16.66 0.153661 2.43 0.045267 1.27 0.047244 4.43 0.020316
8/1/2011 12.28 -0.01792 17.6 -0.05341 2.42 0.004132 1.32 -0.03788 4.69 -0.05544
7/1/2011 12.53 -0.01995 17.89 -0.01621 2.18 0.110092 1.31 0.007634 4.79 -0.02088
6/1/2011 11.97 0.046784 17.51 0.021702 2.09 0.043062 1.3 0.007692 4.88 -0.01844
5/3/2011 10.25 0.167805 17.41 0.005744 2.05 0.019512 1.36 -0.04412 4.8 0.016667
4/1/2011 10.19 0.005888 16.14 0.078686 1.79 0.145251 1.29 0.054264 5.19 -0.07514
3/1/2011 10.36 -0.01641 15.28 0.056283 1.76 0.017045 1.31 -0.01527 4.73 0.097252
2/2/2011 10.21 0.014691 14.47 0.055978 1.64 0.073171 1.19 0.10084 4.92 -0.03862
1/3/2011 10.12 0.008893 15.43 -0.06222 1.32 0.242424 1.12 0.0625 5.26 -0.06464
12/1/2010 10.05 0.006965 16.38 -0.058 1.27 0.03937 1.14 -0.01754 4.37 0.203661
11/1/2010 10.08 -0.00298 16.68 -0.01799 1.26 0.007937 1.02 0.117647 4.13 0.058111
10/1/2010 10.17 -0.00885 16.64 0.002404 1.04 0.211538 1.07 -0.04673 4.01 0.029925
9/1/2010 9.87 0.030395 15.32 0.086162 1 0.04 0.95 0.126316 4.07 -0.01474

56
8/2/2010 9.51 0.037855 13.65 0.122344 1.02 -0.01961 0.95 0 4.09 -0.00489
7/1/2010 9.05 0.050829 13.65 0 0.87 0.172414 0.78 0.217949 4.01 0.01995
6/1/2010 8.95 0.011173 12.17 0.121611 0.81 0.074074 0.78 0 4.55 -0.11868
5/3/2010 8.98 -0.00334 11.54 0.054593 0.68 0.191176 0.75 0.04 4.83 -0.05797
4/1/2010 9.03 -0.00554 11.16 0.03405 0.68 0 0.81 -0.07407 5.14 -0.06031
3/1/2010 8.87 0.018038 11.2 -0.00357 0.68 0 0.75 0.08 5.23 -0.01721
2/1/2010 8.74 0.014874 11.01 0.017257 0.67 0.014925 0.67 0.119403 4.38 0.194064
1/4/2010 8.84 -0.01131 11.01 0 0.65 0.030769 0.65 0.030769 4.36 0.004587
12/1/2009 8.93 -0.01008 10.66 0.032833 0.66 -0.01515 0.77 -0.15584 3.93 0.109415
11/2/2009 8.95 -0.00223 11.29 -0.0558 0.65 0.015385 0.64 0.203125 4.38 -0.10274
10/1/2009 8.85 0.011299 10.48 0.07729 0.65 0 0.63 0.015873 4.67 -0.0621
9/1/2009 8.81 0.00454 10.72 -0.02239 0.64 0.015625 0.62 0.016129 4.75 -0.01684
8/3/2009 8.81 0 10.55 0.016114 0.66 -0.0303 0.63 -0.01587 4.37 0.086957
7/1/2009 8.87 -0.00676 10.46 0.008604 0.66 0 0.63 0 4.01 0.089776
6/1/2009 8.87 0 9.82 0.065173 0.66 0 0.55 0.145455 3.95 0.01519
5/1/2009 8.87 0 10 -0.018 0.69 -0.04348 0.54 0.018519 3.88 0.018041
4/1/2009 8.51 0.042303 8.76 0.141553 0.67 0.029851 0.58 -0.06897 3.29 0.179331
3/2/2009 8.78 -0.03075 8.26 0.060533 0.63 0.063492 0.48 0.208333 3.22 0.021739
2/2/2009 8.83 -0.00566 8.58 -0.0373 0.63 0 0.45 0.066667 2.71 0.188192
1/1/2009 8.87 -0.00451 8.35 0.027545 0.61 0.032787 0.48 -0.0625 2.76 -0.01812
12/1/2008 8.87 0 8.26 0.010896 0.65 -0.06154 0.48 0 2.81 -0.01779
11/3/2008 8.78 0.010251 8.12 0.017241 0.62 0.048387 0.45 0.066667 2.71 0.0369
10/1/2008 8.83 -0.00566 7.75 0.047742 0.55 0.127273 0.44 0.022727 2.51 0.079681
9/1/2008 8.96 -0.01451 10.09 -0.23191 0.67 -0.1791 0.52 -0.15385 3.39 -0.25959
8/1/2008 9.05 -0.00994 10.92 -0.07601 0.69 -0.02899 0.56 -0.07143 3.39 0
7/1/2008 8.87 0.020293 11.1 -0.01622 0.73 -0.05479 0.52 0.076923 3.39 0
6/2/2008 9.01 -0.01554 11.47 -0.03226 0.72 0.013889 0.51 0.019608 3.45 -0.01739

57
5/1/2008 9.01 0 11.38 0.007909 0.79 -0.08861 0.61 -0.16393 3.74 -0.07754
4/1/2008 9.05 -0.00442 11.38 0 0.73 0.082192 0.62 -0.01613 3.31 0.129909
3/3/2008 9.05 0 11.56 -0.01557 0.73 0 0.63 -0.01587 2.91 0.137457
2/1/2008 9.14 -0.00985 11.65 -0.00773 0.72 0.013889 0.75 -0.16 3.39 -0.14159
1/3/2008 9.41 -0.02869 11.47 0.015693 0.72 0 0.71 0.056338 4.07 -0.16708

58
 Appendix D.1
Client Risk Profile

1. The investment I am now 80-100% 60-

40-60% 20-40% 20% or Less
considering represents the 80%
Following percentage of my total
investment portfolio. 1 2 3 4 5


2. In how many years do client 1 Year 2-5
10- Years 20- Years 21+ Years
expect to start spending Years
the money client're investing? 1 2 3 4 5

3. I do not foresee any major Strongly Agree Agree Strongly
Neutral Disagree
expenses that might cause Disagree
me to make withdrawals from
this investment before that time. 5 4 3 2 1


4. When I start making Strongly
withdrawals from this Strongly Agree Agree Neutral Disagree
Disagree
investment,
they will be used to fund my
living expenses. 1 2 3 4 5

5. When it comes to investing, Strongly Agree Agree Strongly

Neutral Disagree
protecting the money Disagree
I have is my highest priority.
1 2 3 4 5

6. I always choose investments Strongly
Strongly Agree Agree Neutral Disagree
with the highest Disagree
possible return. 5 4 3 2 1


7. I prefer an investment strategy Strongly Agree Agree Strongly

Neutral Disagree
designed to Disagree
grow steadily and avoid sharp ups
and downs 1 2 3 4 5

59
 8. To meet my financial goals, Strongly Agree Agree Strongly
Neutral Disagree
my investments must Disagree
grow at a high rate of return.
5 4 3 2 1

9. I am unwilling to wait several Strongly Agree Agree Strongly
Neutral Disagree
years to recover Disagree
from losses I incur in an extended
down market. 1 2 3 4 5

10. I prefer investments that are Strongly Agree Agree Strongly

Neutral Disagree
low risk, even if Disagree
returns are lower than the rate of
inflation 1 2 3 4 5

10-14 Secure 30-33 Progressive 15-19 Cautious 34-36

Adventurous

20-22 Conservative 37-40 Growth 23-26 Moderate 41-44

Aggressive

7-29 Balanced 45-50 Aggressive Plus

60

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