Jacky and Betty, a couple at early 40s with two children, appoint you as their financial planner.
Question:
Jacky and Betty, a couple at early 40s with two children, appoint you as their financial planner. Below are the financial information provided by them for the month or as at 30 September 2023.
Cash on hand $260
Credit card outstanding $2545
Mutual funds. $9500
Balance on car loan $7700
HKSAR green bond due in 2025 $10000
Investment property located on Lamma Island $153,700
Apartment for self-use $17600
Checking account balance. $3300
Mortgage loan balance on investment property $92000
Motor vehicle for self-use $11500
Retirement funds $98000
Rental income $660
Savings account balance $1500
Purchase price of Shares invested in HSBC $2780
Market price of shares invested in HSBC $2800
Antique vase $700
Utility bills due $520
Monthly income (gross) $9500
Monthly take-home pay $8700
Total monthly expenses $4500
Cash value of life insurance $3000
(a) Compute the total liquid assets, total real estate, total personal possessions, total investment assets, total liabilities, and net worth.
(b) Calculate, interpret and evaluate the liquidity ratio of Jacky and Betty. Suggest TWO ways to improve the liquidity ratio of Jacky and Betty.
(c) Jacky and Betty are now at early 40s. They believe it's too early to begin considering retirement planning. Do you agree? Explain your reasoning in terms of the long-term benefits of investing.