Mutual fund is managed by the professional so that

This preview shows page 18 - 22 out of 23 pages.

food trading company. Mutual fund is managed by the professional so that Billy saves his time in investment. Besides, mutual fund offers higher interest rate than fixed deposit account which is around 4%-5%. Otherwise, I also suggest Belly investing in the long term period investment which is PRU linked retirement growth. It is the single premium for investment- linked insurance plan pays a monthly guaranteed income. Their pay-out stage will based on your selected terms for the accumulation and pay-out stages, your annual guaranteed income (payable monthly) is determined as a percentage of the gross single premium (refer to the table below) This insurance encourage the age between 30 to 60 years old who wants to meet their retirement goals. 95% of single premium will invested in the PRU linked golden equity fund, golden bond fund and golden managed fund (pay-out stage). The policy says that upon survival in each month of the pay-out period, the monthly guaranteed income will be paid out. In the cases, we know that Belly is now 38 years old to reach his retirement age which is 60 years old we have 22 years to accumulate the money to achieve Belly retirement goals. Let’s assume that we pay a single premium of RM 950,000 today we choose to accumulate funds for over 20 years and the pay-out period will be 20 years at 7.75% Billy will start receiving the annual guaranteed income of RM73,625 per year. By the end of the stage Billy will receive the remaining fund value in lump sum payment on top of the guaranteed monthly income that have already received. Your funds’ performance will have unstable value but then Jack still will receive the yearly guaranteed income during the pay-out stage, which is RM73,625 for 20 years = RM1,472,500. 15
Retirement Need Analysis Billy Retirement Capital Requirement (WANT) Beginning Mode PMT RM120,000 n 20 years P/Y 1 year I/Y 3% (7%-4%) PV RM1,838,855.89 At the age of 60, Billy will need to have RM1,838,855.89 so that he can withdraw RM120,000 annually for 20 years. Accumulation of Fund (HAVE) EPF PV RM150,000 N 60years old-38years old=22 I/Y 5 FV RM438,789.11 Investment PV RM100,000 N 60years old-38years old= 22 I/Y 7 FV RM443,040.17 TOTAL RM881,829.28 16
Shortfall (NEED) WANT RM1,838,855.89 - HAVE (RM881,829.28) NEED RM957,026.61 Billy experiences a shortfall of RM957,026.61. By the age of 60, Billy need this amount of money in order to achieve his goal of getting RM120,000 annually for 20 years. 17
Recommendation However, in order to achieve this goal effectively, Billy can consider the use of compounding effect of interest rate. Billy can invest his money in the financial market such as stock market or bond market. In this case, I would recommend Billy to invest in mutual fund. Mutual fund is suitable for Billy as Billy is a boss of online food trading company. Mutual fund is managed by the professional so that Billy saves his time in investment. Besides, mutual fund offers higher interest rate than fixed deposit account which is around 4%-5%.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture