1A Explain whether the statements are true or false.

a.Personal financial planning is a process that should be carried out on a regular five-yearly basis.

b.It is far more important for older people to engage with personal financial planning, than younger people.

c.If inflation is measured at 3% per annum and a savings account is paying interest at 3% per annum, the purchasing power of the savings made will remain unchanged.

d.Career planning is not a part of financial planning.

e.Once you have set your financial goals, you should try to achieve them by all means.

1BCase study

Peter, aged forty, and his wife Ming have three young children and together they are buying their own home. Peter works in the public sector and has joined the Mandatory Pension Fund for the last fifteen years. Ming runs a small business from home that generates an income for her of HK$5000 each month.

They have a large mortgage and owe significant sums on their credit cards. Peter has never considered undertaking any kind of personal financial planning. His view is as follows:

Given my current financial predicament, I have absolutely no choices to make as I have no spare cash to consider investing. Personal financial planning is for people with cash to save.

a.Do you agree with Peters view on personal financial planning?

b.Suggest a SMART financial goal to them.

c.Describe some of the benefits that personal financial planning could offer to them?

C Calculation

Your friend is now working in an insurance company. He is prompting an investment project of his company to you:

Our company is now offering a plan, which is a very good project. You just need to pay $3000 at the end of each month from January 2017 for ten years. Then you can get back HK$1million on 31st December 2046.

Assume that the market interest rate is 6%p.a. and is stable during the period, will you consider the project?