Chris:

• Is an experienced Project Engineer and is employed by one of the largest engineering consulting firms in Australia. The job security is high. However, the scope for further career advancement is not good

• Chris enjoys the technical aspects of engineering and has little interest in promotion to a management role.

• Chris works regular hours and the occasional weekend. Chris is a keen cyclist and likes to spend much of any free time riding with friends.

• Chris rents a studio apartment but would like to purchase an apartment within the next five years.

• Chris has a good understanding of financial markets and is familiar with risk and return. - Both personally and financially, Chris is considered to be a risk taker

QUESTION:

1. Discuss the key factors that Richard should take into consideration for his financial plan and the allocation of savings. In your response make specific references to the case information.

2. CHRIS is considering purchasing some shares in the company he works for. The company is listed on ASX and has a current share price of AUD3.50. Earnings in 20X2 were AUD0.35 per share and in 20X1 were AUD0.30 per share. The average PE (based upon projected earnings for 20X3) for similar companies is 11.5.

Review this potential investment by CHRIS and prepare a recommendation.

3. Discuss how Richard can use insurance to protect his home against key risks.

Client Name Chris Age Status 29 Single, renter of Studio apartment Nil Engineer AUD115,000 pa from salary Dependents Occupation Net Income (after super and after tax) Expenses (living and financial) Major assets AUD85,000 pa including paying rent for the Studio apartment Cash at bank AUD15,000 Superannuation AUD120,000 Nil Major liabilities Major financial goals Purchase an apartment within five years (price approx AUDO.7 million) with 20% cash and 80% bank loan Client Name Chris Age Status 29 Single, renter of Studio apartment Nil Engineer AUD115,000 pa from salary Dependents Occupation Net Income (after super and after tax) Expenses (living and financial) Major assets AUD85,000 pa including paying rent for the Studio apartment Cash at bank AUD15,000 Superannuation AUD120,000 Nil Major liabilities Major financial goals Purchase an apartment within five years (price approx AUDO.7 million) with 20% cash and 80% bank loan