Bbmf2113 Personal Financial Planning Academic Year 2021/2022 Group Written Assignment

BBMF2113 PERSONAL FINANCIAL PLANNING
Academic Year 2021/2022

Group Written Assignment
Students’ names Students’ ID Nos.

1. Chong Yen Yen 21WBR13649
2. Giam Co Nie 21WBR06155
3. Kishan Danniel Bin Hussen 21WBR11396
4. Soo Jing Kai 21WBR13652
5. Yap Zhi Hang 21WBR13564
Programme: RFI Word count: Tutorial class: G4
1
FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
COURSEWORK FEEDBACK FORM FOR WRITTEN REPORT
COURSE CODE/ COURSE TITLE: BBMF2113 PERSONAL FINANCIAL
PLANNING
NAME OF STUDENT(s): ID No:
1)Chong Yen Yen 21WBR13649
2)Giam Co Nie 21WBR06155
3) Kishan Danniel Bin Hussen 21WBR11396
4)Soo Jing Kai 21WBR13652
5) Yap Zhi Hang 21WBR13564
6)
PROGRAMME: RFI
YEAR OF STUDY: Year 2 ACADEMIC YEAR: 2021/2022
SEMESTER: Semester 3
GROUP NO: RFI Y2S2G4
COURSEWORK NO: NATURE OF MARKS ALLOCATED:
1/2/3 COURSEWORK: (e.g
individual/group
assignment, project paper,
/100
report etc)
Overall feedback (e.g. strengths, weaknesses, areas for improvement etc) :
2
Student’s Date: Lecturer’s /Tutor’s Date:
Acknowledgement: 25/03/2022 Name and Signature:
Soo Jing Kai
3
Plagiarism Statement
Read, complete and sign this statement to be submitted with your written work.
We confirm that the submitted work is all our own work and is in our own words.
Name (Block Capitals) Reg. No. Signature
1. Chong Yen Yen 21WBR13649 yen .

2. Giam Co Nie 21WBR06155 conie
3. Kishan Danniel Bin Hussen 21WBR11396 kishan
4. Soo Jing Kai 21WBR13652 kai
5. Yap Zhi Hang 21WBR13564 hang
Programme Bachelor of Finance and Investment

Tutorial Class RFI G4
Date 25/03/2022
4
BBMF2113 PERSONAL FINANCIAL PLANNING
COURSEWORK ASSIGNMENT – TEAM MEMBER CONTRIBUTIONS
Programme: Bachelor of Finance and Investment
Group leader: Soo Jing Kai Handphone no.:011-
12373791
Assignment Name: Name: Name: Name: Name:

sections Chong Yen Giam Co Kishan Soo Jing Yap Zhi
Yen Nie Danniel Bin Kai % Hang
% % Hussen contributio %
contribution contributi % n contributio
on contribution n
Eg: Lim 50% Chan 25% Quek 25% Tan 0% Anne 0%
Product
100%
Cash Flow 100%
statement
(100%)
Net worth 100%
Statement
(100%)
Financial 100%
Ratios
(100%)
Retirement 100%
needs
(100%)
Recommend 100%
ations
(100%)
100% 100% 100% 100% 100%
5
TOTAL %
6
Team Member Contribution:
Name of student Total team member % contributions * Signature

Chong Yen Yen 100% yen
Giam Co Nie 100% Conie
Kishan Danniel Bin Hussen 100% Kishan
Soo Jing Kai 100% Kai
Yap Zhi Hang 100% hang
* Any student contributing less than 100% on the above will have 10 marks deducted from
their shared group marks.
7
COURSEWORK ASSESSMENT CRITERIA
Question 1 (25 marks)- Group Work
Assessment Poor Satisfactor Good Excellent Marks Marks
Criteria 1 y 3 4 awarded
2
Calculation Many errors Some errors Calculated Calculated 15%
in the in the correctly; correctly;
calculations calculations; supported supported with
supported with relevant
with limited limited workings
workings workings
Discussion -No -Lack -High -Innovative and 10%

on the originality originality degree of original
relevant -Vague and -Weakly originality -Well-thought
key area ambiguous organized -Well and profound
discussion with no organized discussion with
logical but logical
sequencing demonstrat sequencing
discussion es illogical
sequencing
Question 2 (25 marks)- Group Work
Calculation Many errors Some errors Calculated Calculated 10%
in the in the correctly; correctly;
calculations calculations; supported supported with
supported with relevant
with limited limited workings
workings workings

8
logical but logical
sequencing demonstrat sequencing
discussion es illogical
sequencing
Question 3 (40 marks)- Individual
logical but logical
sequencing demonstrate sequencing
discussion s illogical
sequencing
Overall of the report (10 marks)
Overall of Poorly Reasonably Logical Impressive 5%
the report structured clear structure; structure and
and structure and good quality presentation;
presented; presentation; presentation no major
substantial some ; grammar and
grammar grammar and no major spelling errors
and spelling spelling grammar
errors errors and spelling
errors
TOTAL MARKS
100%
9
Turnitin Similarity Index (%) Score page
10
Table of Content
Group Assignment.................................................................................................................12
1.1 Combined annual cash flow and net worth statement for Kent Lim and Serene Tan........12
1.2 Net Worth Statement of Kent Lim and Serena Tan..............................................................13
1.3 Personal financial ratios analysis for Kent Lim and Serene Tan.........................................20
1.3.1 Basic Liquidity Ratio........................................................................................................20
1.3.2 Liquid-Assets-to-Net worth Ratio....................................................................................20
1.3.3 Savings Ratio.....................................................................................................................21
1.3.4 Debts-to-Assets Ratio........................................................................................................21
1.3.5 Debts Service Ratio...........................................................................................................21
1.3.6 Non-Mortgage Debts Service Ratio.................................................................................22
1.3.7 Net Investment Assets to Net worth Ratio......................................................................22
1.4 Current financial situation analysis.......................................................................................23
2.1 Retirement needs.....................................................................................................................24
2.2 Recommendation.....................................................................................................................28
2.2.1 Unit Trust..........................................................................................................................28
2.2.2 Stock..................................................................................................................................29
2.2.3 Exchange-Traded Fund (ETF).........................................................................................31
2.2.4 Cryptocurrency.................................................................................................................33
2.2.5 Real Estate Investment Trust (REIT).............................................................................35
2.3 Conclusion................................................................................................................................37
Reference.................................................................................................................................38
3. Individual Assignment.......................................................................................................39
3.1 Chong Yen Yen (21WBR13649).............................................................................................39
3.2 Giam Co Nie (21WBR06155）................................................................................................42
3.3 Kishan Danniel bin Hussen (21WBR11396)..........................................................................45
3.4 Soo Jing Kai (21WBR13652)...................................................................................................49
3.5 Yap Zhi Hang (21WBR13564)................................................................................................52
Individual Reference..............................................................................................................58
Chong Yen Yen...............................................................................................................................58
Giam Co Nie....................................................................................................................................59
Kishan Danniel Bin Hussen.............................................................................................................60
Soo Jing Kai....................................................................................................................................60
Yap Zhi Hang..................................................................................................................................61
11
Group Assignment
1.1 Combined annual cash flow and net worth statement for Kent Lim and Serene Tan
STATEMENT OF CASH FLOW

ITEMS NOTE KENT LIM SERENE TAN COMBINED
S
RM RM RM
CASH INFLOW
Salary 1 162,000 60,000 222,000
Tax reduction 2 -17,820 -3,900 -21,720
Transport allowance 3 16,200 16,200
EPF (contribute 11%) 4 -17,820 -17,820
Dividend 4,850
TOTAL CASH INFLOWS 142,560 56,100 203,510
CASH OUTFLOWS
Fixed Outflows:
Cash pay for mortgage: Double 5
25,555.92
storey
Cash pay for mortgage: 5
37,884
Condominium
Loan payment (motor vehicle) 30,800
Insurance paid (Kent Lim: whole
life insurance + medical plan; 6 8,400 3,000 11,400
Serene Tan: whole life insurance)
Maid’s salary 7 6,720
Total fixed cash outflow 8,400 3,000 112,360
Variable Outflows:
Car maintenance 8 6,000 6,600 12,600
Entertainment 9 12,000 12,000
12
Food 10 12,000
Dining out 10 6,000
Personal used (clothing and etc.) 2,400 3,600 6,000
Piano class cost for Aston 11 1,200
Kindergarten cost for Aston 11 8,400
Other expenses for Aston (uniform,
1,000
books, and stationery)
Medical and dental care 2,000
Electricity bill 12 2,400
Water bills 12 420
Unifi 12 1,176
Mobile phone bill 13 600 816 1,416
Miscellaneous spending (newspaper,
2,400
repairs, upkeep, etc.)
Car insurance premium 1,792 1,895 3,687
Total variable cash outflow 22,792 12,911 72,699
TOTAL CASH OUTFLOWS 31,192 15,911 185,059
NET CASH FLOW (Surplus) 18,450.96
1.2 Net Worth Statement of Kent Lim and Serena Tan
STATEMENT OF NET WORTH

ITEMS NOTES KENT LIM SERENE TAN COMBINED
RM RM RM
ASSETS
Cash/Cash Equivalent:
Savings 123,000
Fixed deposit 50,000 50,000
Insurance cash value 28,000 24,000 52,000
Sub-Total 225,000
Investment Assets:
KLSE Shares 97,000
13
Unit Trust 57,000
PMMMF 50,000
EPF 334,000 85,000 419,000
PRS 33,000
Condominium 750,000
Sub-Total 1,406,000
Personal-Use Assets:
House- double storey 670,000
Kent Lim's car – Honda CRV 110,000
Serene Tan's car – Mazda 6 98,000
Transferable club membership 22,500
Sub-Total 900,500
Total ASSETS (Cash/cash 2,531,500
equivalents + Investment assets +
Personal-use assets)
LIABILITIES
Current Liabilities:
Credit Card 21,400 7,500 28,900
Long-term Liabilities:
Double storey outstanding loan 14 413,530.67
Condominium outstanding loan 14 700,043.33
Car loan outstanding 189,000
Sub-Total 1,302,574
TOTAL LIABILITIES (Current liabilities + Long-term liabilities) 1,331,474
NET WORTH (Total assets - Total Liabilities) 1,200,026
Notes:
1. Kent Lim’s annual salary = Monthly gross income x 12 months
14
= RM13, 500 × 12
= RM162, 000
2. Tax reduction:
Kent Lim = Monthly tax reduction x 12 months

= RM1, 485 x 12
= RM17, 820
Serene Tan = Monthly tax reduction x 12 months

= RM325 x 12
= RM3, 900
3. Transport allowance = Kent Lim’s annual gross income × 10%

= (RM13, 500 × 12) × 10%
= RM16, 200
4. EPF for Kent Lim = Kent Lim’s annual income × 11%

= RM162, 000 x 11%
= RM17, 820
5. Cash payment for mortgage
Double storey:
P/Yr. = 12, End mode
PV = 450,000
I = 4.5%
N = 35 x 12 = 420
PMT = 2,129.66
15
A year is 2,129.66 x 12 = RM 25,555.92
Condominium:
PV = 730,000
I = 3.2%
N = 30 x 12 = 360
PMT = 3,157
A year is 3,157 x 12 = RM 37,884
6. Insurance paid:
Kent Lim’s annual premium

= medical insurance premium + whole life insurance premium
= RM4, 800 + RM3, 600
= RM8, 400
7. Maid’s salary = Monthly salary × 12 months

= RM560 x 12
= RM6, 720
8. Car maintenance:
Serene Tan = Monthly maintenance payment × 12 months
= RM550 x 12
= RM6, 600
16
9. Kent Lim’s entertainment spending = Monthly entertainment spending × 12 months
= RM1, 000 × 12
= RM12, 000
10. Household spending:

Food = Monthly food spending × 12 months
= RM1, 000 × 12
= RM12, 000
Dining out = Monthly dining out spending × 12 months

= RM500 × 12
= RM6, 000
11. Children’s expenses:

Piano class cost = Monthly cost × 4 quarters
= (RM300 × 4)
= RM1, 200
Kindergarten fee = Monthly cost x 4 terms

= RM2, 100 × 4
= RM8, 400
12. Utilities bill

i. Electricity bill = Average monthly electricity bill × 12 months
= RM200 × 12
= RM2, 400
ii. Water bill = Water bill × 12 months

= RM35 × 12
= RM420
17
iii. Unifi bill = Monthly Unifi bill × 12 months
= RM98 × 12
= RM1, 176
13. Mobile phone bill:

Kent Lim’s = (Monthly phone bill × 12 months) – company reimbursement
= (RM100 × 12) – 50%
= RM600
Serene Tan’s = Monthly phone bill × 12 months

= RM68 × 12
= RM816
14. Outstanding house loan
Double storey:
PV = 450,000
I = 4.5%
N = 35 x 12 = 420
PMT = 2,129.66
P1-P72, loan balance = 413,530.67
Condominium:
PV = 730,000
I = 3.2%
N = 30 x 12 = 360
PMT = 3,157
18
P1-P-24, loan balance = 700,043.33
19
1.3 Personal financial ratios analysis for Kent Lim and Serene Tan
1.3.1 Basic Liquidity Ratio
= Cash/Cash Equivalents / Monthly Expenses
= 225,000 / (185,059 / 12)
= 14.59 months
Basic liquidity ratio evaluates a person's ability to cover his or her monthly expenses in the
event of an emergency. Kent Lim and Serene Tan have enough liquidity to cover their
expenses for a little bit over 14 months. It is more than enough for the minimum
recommended by personal finance experts, which is 3-6 months. Therefore, their Basic
Liquidity Ratio is healthy. In the event of job loss or unexpected expenses, Kent and Serene
have adequate liquidity to face it. However, it may not be the most ideal situation as the basic
liquidity ratio is too high. A high basic liquidity ratio may be due to the couple not utilizing
the assets well. Such assets and cash can be used to invest so they can get a better return to
achieve their dream to retire early.
1.3.2 Liquid-Assets-to-Net worth Ratio
= Liquid assets / Net Worth x 100%
= 225,000 / 1,200,026 x 100%
= 18.75%
Liquid assets to net worth ratio helps individuals to calculate the percentage of net worth that
is liquid. 18.75% of Kent Lim and Serene Tan’s net worth is in the form of liquid assets. It is
healthy as it is at 15% or above recommended by personal finance experts. They can easily
convert the liquid assets to cash when they need cash immediately in an emergency situation.
20
1.3.3 Savings Ratio
= Savings / Gross Income x 100%
= 18,450.96 / 203,510 x 100%
= 9.07%
Savings ratio is a percentage of gross income of a person which is set aside for future
consumption. A healthy savings ratio can assist an individual to achieve his financial goal in
the future. Kent Lim and Serene Tan set aside 9.07% of their gross income as savings. It is
not healthy as it is below the threshold of 10% or above recommended by personal finance
experts. Since they are planning to retire early, they should reduce their expenses which are
unnecessary such as luxury items or entertainment that will increase their financial burden.
1.3.4 Debts-to-Assets Ratio
= Total Debts / Total Assets x 100%
= 1,331,474 / 2,531,500 x 100%
= 52.6%
Debts-to-assets ratio used to determine whether an individual’s assets is enough to cover his
debts. It helps individuals to understand whether they have over-borrowed or are
experiencing solvency problems. Kent Lim and Serene Tan’s Debts-to-Assets Ratio is 52.6%,
which is quite high. It is not healthy because personal finance experts recommend it should
be 50% or below. They may have medium to long term solvency issues with the current debt
to assets level.
1.3.5 Debts Service Ratio
= Total Annual Loan Repayments / Annual Take Home Pay x 100%
= (25,555.92 + 37,884 + 30,800) / 203,510 x 100%
21
= 46.31%
Debts service ratio compares the annual or monthly payment of an individual to service debts
with his or her annual take home pay. This ratio is used to calculate an individual’s ability to
repay his debt such as mortgage loan and car repayment. Kent Lim and Serene Tan’s Debts
Service Ratio is 46.31%, which is quite high. It is not healthy because personal finance
experts recommend it should be 35% or lower. They may face issues in paying mortgages
with the current cash inflows. They should try to increase their sources of income to reduce
the debt service ratio so they can be in a better position.
1.3.6 Non-Mortgage Debts Service Ratio
= Total Non-Mortgage Loan Repayments / Annual Take Home Pay x 100%
= 30,800 / 203,510 x 100%
= 15.13%
Kent Lim and Serene Tan’s Non-Mortgage Debts Service Ratio is 15.13%. It is not healthy
because personal finance experts recommend it should be 15% or below. They should try to
increase their sources of income to reduce the non-mortgage debt service ratio so they can be
in a better position. Otherwise, they can try to decrease their non-mortgage debts by avoiding
purchasing luxury cars.
1.3.7 Net Investment Assets to Net worth Ratio
= Net Investment Assets / Net Worth x 100%
= 1,406,000 / 1,200,026 x 100%
= 117.16%
Net investment asset to net worth ratio is to measure how much of the individual’s assets are
used to produce their income and wealth in the long-term. 117.16% of Kent Lim and Serene
Tan’s net worth are invested assets and are used to accumulate capital for the long-term.
22
Since it is at 50% or above recommended by personal finance experts, it is healthy. It is good
for Kent and Serene to invest in various investment vehicles as relying on fixed income
investments is insufficient to grow their wealth providing that they are looking to retire early.
1.4 Current financial situation analysis
Based on the statement of cash flow, Kent Lim and Serene Tan has a positive combined cash
flow of RM36,270.96 which is a healthy cash flow as it indicates they have a higher income
compared to their expenses. This is contributed majorly by Kent Lim’s large salary of
RM162,000. Serene Tan contributes RM60,000, transport allowance amount to RM16,200
and dividend earned is only RM4,850 annually. All these cash inflows total up to RM81,050
which is only 50% of what Kent Lim is contributing to the positive cash flow. This shows
that Kent Lim’s salary as a senior engineer is heavily relied on to maintain a positive cash
flow. This might be risky as if in any case Kent Lim is unable to work due to an unfortunate
incident, the cash flow will turn negative and they will not be able to sustain their expenses.
As for their cash outflows, they are paying mortgage on two properties which are the double
story linked house that they are living in now and a condominium at Kelana Jaya for
investment purposes. However, the condominium is not being rented out which can be a
problem for them as they have to pay mortgage for two houses totaling up to RM63,439.92.
This amount contributes to about 34% of the total cash outflow which shows that it is a huge
commitment and it is best if the condominium can be rented out to reduce their cash outflow.
Based on their net worth statement, Kent Lim and Serene Tan have a combined net worth of
RM1,200,026. This is calculated by subtracting all of their liabilities from their assets. A
positive net worth indicates that they have more liabilities than assets and they have a good
financial health.
This couple's total assets are RM2,531,500. The majority of their assets are investment assets
(55.54 %) and personal use assets (35.57 %), with just a minor percentage attributed to cash
and cash equivalents (8.89%). It is beneficial for them to keep a small amount of cash or cash
equivalent on hand. This is owing to the fact that storing cash will not give them with any
benefit and will depreciate in value over time due to inflation however, they are extremely
liquid and low-risk. It may occasionally yield a very poor return. As a result, the couple can
save a small-to-medium amount of their assets as an emergency reserve in form of cash or
cash equivalent to utilize it in an emergency.
23
Besides that, the couple has a large investment portfolio with 55.54% of their total assets
attributing to investment assets. RM97,000 is allocated for KLSE shares, RM57,000 for unit
trusts and RM50,000 for PMMMF. These investments are generally higher risked
investments but they help to cover inflation rates and provide a good return on investment in
the long run. Since Kent Lim and Serene Tan are aged 37 and 32 respectively, they are
classified under the growth-oriented youth stage hence it is advised for them to expand their
investment portfolio with more growth investments that focuses on increasing their capital.
Furthermore, it is notable that the couple’s debts-to-asset ratio is unhealthy with it being
52.6%. This is majorly due to the outstanding loan on the condominium that they own
amounting to RM700,043.33 which makes up 52.58% of their total debts.
2.1 Retirement needs
Step 1: Calculate the future value of RM20, 000 per month when Kent Lim is 55 years old.
PV 20,000*12=RM240,000
I 4%
N 55-37=18
FV RM486,195.96
To calculate Kent Lim's retirement needs, we must first determine how much money they will
require each year throughout their retirement. They would require RM 20,000 each month
when they reach 55 years old, which equates to RM 240,000 per year when multiplied by 12
months. Calculate the future value of RM240, 000 over the next 18 years using the current
24
inflation rate. Based on a 4% interest rate, the future value will be RM486, 195.96 after the
calculations. Kent Lim's monthly needs would increase from RM10, 000 to RM40, 526.41
when he turns 55. As a result, they will need RM 486,195.96 each year in retirement to
satisfy their living expenses.
Step 2: Calculate the present value of their retirement needs.
PMT RM486,195.96
I adj (1.06/1.04)-1*100%=1.92%
N 25
PV RM9,765,954.89
*begin mode
After calculating the future value of the expenses needed after retirement, the annual cost
comes to RM486, 196.96. Assume they will live for another 25 years after retirement and that
a 6% average rate of return is the least they require. However, because the inflation rate will
impact the currency's value, the net inflation ration rate will be employed. The inflation rate
is adjusted to 1.92 percent using the equation [(1.06/1.04)-1*100%]. As a result, the current
value of the retirement money they desire per year for the next 25 years is RM9, 765,954.89.
Step 3: Calculate the available current assets’ future value of Kent Lim and Serena Tan.
25
Current Assets Current Value
KLSE share RM97,000
Unit Trust RM57,000
PRS RM33,000
Money Market Fund RM50,000
Fixed Deposit RM50,000
Saving Account RM123,000
EPF RM334,000+RM85,000=RM419,000
Insurance Policies RM28,000+RM24,000=RM52,000
Condominium RM750,000
Total RM1,631,000
PV RM1,631,000
26
I 6%
N 18
FV RM4,655,427.16
Moreover, Kent Lim and Serena Tan have a large number of assets. The available assets
included RM97,000 of KLSE shares, RM57,000 of unit trust, RM33,000 of PRS, RM 50,000
of money market fund, RM50,000 of fixed deposit, RM123,000 of saving account, total
RM419,000 for EPF account which included Kent Lim and Serena Tan’s EPF account, total
of RM52,000 of insurance policies, and condominium RM 750,000. The total current assets
that Kent Lim and Serena Tan has own are RM1, 631,000. By using the total amount of the
current assets to calculate the future value of Kent Lim’s assets at age 55, with an expected
return of 6%. Therefore, the future value of current assets after 18 years is RM4, 655,427.16,
and the expected rate of return is 6%.
Step 4: Calculate their needs.
RM9, 765,954.89-RM4, 655,427.16= RM5, 110,527.73
In addition, after we obtain the RM4, 655,427.16 from step 3, we should utilize the difference
between the amount they want and the amount they have to determine their retirement needs.
We can get the final result by minus RM4, 655427.16 from RM9, 765,954.89 to get RM5,
110,527.73. It is insufficient to rely just on their current income, interest, and dividends. As a
result, people should use part of their available assets to invest in higher-yielding products
such as equity funds, high-yield equities, REITs, and unit trusts to satisfy their retirement
27
needs.
2.2 Recommendation
Initial capital investment: (net cash flow) 18450.96 + bonus for 2 months (13500*2=27000) =
total RM45, 450.96 per year can invest
I will suggest Kent Lim and Serene Tan to invest in five different investments which are: unit
trust, stock, ETF, crypto-currency and REIT to achieve their financial goals. I will advise
Kent and Serene to invest their net cash flow and bonus which amounting to RM45, 450.96
annually into the investments mentioned above.
2.2.1 Unit Trust
Firstly, a unit trust is a financial instrument that collects money from many investors and
invests it in equities like bonds, stocks, money market instruments, and other assets. It is
managed by professional managers and gives individuals a chance to invest in securities. The
risks and profits allocation depend on the proportionate participation in the investment. In
short, buying an unit trust fund is buying the performance of the portfolio but investors do not
have any voting rights. Furthermore, one of the advantages of unit trust funds is the
diversification of risk of the investment portfolio because the unit trust is managed by the
professionals and the risks will be greatly reduced. Also, the unit trust fund has a high
liquidity and could convert or withdraw money any time from it without getting a penalty for
any emergency purposes.
As Kent Lim and Serene Tan will have 18 years before they retire, I will recommend them
invest RM 13,000 per year in the “Public Global Select Fund, PGSF” for long term capital
appreciation. This investment provides an average annual return (10 years) of 18.64% and has
an annual total return of 17.97% and 30.27% for years 2020 and 2021. One of the reasons I
will suggest they invest in this PGSF for 18 years is because the past record shows: the 3-
years, 5-years, 10-years average annual return maintained at 18% and even the 1-year return
28
up to 30%. Assuming PGSF can perform average return of 18.64% in the next eighteen years.
If they invest RM 13,000 in PGSF annually with 18.64% of average return, they will earn
RM1, 442,627.07 after 18 years.
2.2.2 Stock
Secondly, stock, or known as share (equity) in Malaysia, is a security representing the

ownership of the company. In short, the shareholder is holding one of the parts of the
company’s assets. Individuals and financial institutions can buy or sell the share in the
primary or secondary market, so it has a high liquidity and is valuable. There are 2 types of
the shares which are: common shares and preference shares. The main difference between
them is that common stock gives a voting right to shareholders but preference shares do not.
29
Moreover, the preference shares have priority on the company profit, meaning preference
shareholders will get the dividend before common shareholders. Therefore, if the company is
winding up, common shareholders are the last to claim for the company assets after the
creditors, bondholders and the preference shareholders.
The reasons I recommend Kent and Serene to invest in stock in the following sentences. In
Malaysia, stock market capitalization was 436,537 million USD in 2020. Thus, higher
liquidity and high potential return is suitable for them as they are risk takers and likely to
retire after 18 years. Under the Malaysian Income Tax Act 1967, any capital gain on shares is
not subject to the tax and the government does not tax any profits or gain arising from any
price movement when they sell the shares. Besides, they can hold the share after 18 years and
sell it to earn the capital gain and enjoy the dividend paid in this period.
Furthermore, I will recommend that they invest RM9, 000 annually in RCE Capital Berhad
(RCECAP) listed on Kuala Lumpur Stock Exchange (KLSE). As the image shows, the
historical price movement from RM0.68 (2017) to 1.885 (2022) has an average annual return
of 25.30%. RCECAP had a 12.2% per year on earning growth over the past 5 years
(simplywall.st 2022). RCECAP provided a 4.15% dividend paid higher than the industry
average dividend paid 1.4% and it had a stable dividend growth in the past 10 years.
Assuming RCECAP can perform average return of 25.30% in the next eighteen years. After
investing in RCECAP annually for 18 years with an average annual return of 25.30%, they
will earn RM2, 026,201.86.
30
2.2.3 Exchange-Traded Fund (ETF)
Thirdly, the Exchange-Traded Fund, also known as an ETF, is a financial instrument similar
to the mutual fund but it invests in index, sector, commodity, or other assets. Other than
mutual funds, an ETF can be traded on the stock exchange market. In short, an ETF is a
basket of tracking commodities or a large collection of securities and it is preferred by
investors because it can diversify the risk by tracking different commodities or indexes.
31
Investors will add an ETF into their portfolio for the purposes of: income generation, hedge,
speculation or diversify the risks because the ETF can add-on or less any types of securities
they want.
Unlike mutual funds, which can only trade once per day after the market closes, the price of
an ETF can fluctuate whole days because the shares are purchased and sold on the market or
the manager changes the allocation of the ETF. Moreover, an ETF is more liquid and
effective compared to mutual funds.
I will suggest Kent and Serene invest in the Invesco S&P 500 GARP ETF (SPGP) which
invests in the S & P 500 Index. “S&P 500, or Standard & Poor’s 500 Index is a market-
capitalization weighted index of 500 leading publicly traded companies in the U.S.” (Will
2022). Apart from that, as the chart shows, the S&P 500 has only a handful of negative
annual returns from 1965 to the present, and the rest have been positive, earning percentages
more than 80%, and have an average return of 10.5% from 1957 to 2021.
Back to the recommendation, I will suggest that they invest RM12, 000 in the SPGP for the
following reasons. It had a 10-years average annual return of 18.8% and last year had 35.60%
of return because most of the shares rebounded strongly in the low interest rate environment
during the pandemic. Its asset allocation is more preferred in the healthcare, information
technology and financial sectors, these sectors will have a huge potential growth in future
(Invesco 2021). Not only that, an ETF can be traded in the market, if Kent Lim and Serene
Tan need cash for emergency uses, they can just withdraw the money out and sell the ETF to
convert the cash.
Assuming SPGP can perform average return of 18.8% in the next 18 years. By investing in
SPGP with RM12, 000 per year and enjoy an 18.8% annual return, they will earn RM1,
354,310.94 when they retire in the future.
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2.2.4 Cryptocurrency
Next, cryptocurrency is a digital currency which has 2 major characteristics which are:
decentralization and blockchain technology. One of the defining characteristics of crypto
currencies is that they are not issued by any central authority, which makes them theoretically
immune to any interference or manipulation by anyone. Blockchain is a technology that
distributes databases to everyone and stores the information among the nodes of a computer
network. People can be mined or purchased to increase their holding number of crypto. Like
Bitcoin, Ethereum, Axie Infinity and Dogecoin, their skyrocketing value makes them become
popular as trading instruments.
Thus, I will suggest Kent and Serene to invest in Bitcoin because of the following reasons.
The first reason is because Bitcoin as the popular crypto currency had a skyrocketing in value
over the past few years especially from USD433 (1 Jan 2016) increase to USD42, 224.20 (23
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March 2022) per one coin and the highest price came to USD68, 990 on 10 November 2021.
Unlike fiat money, it has a fixed and predictable monetary supply of 21 million Bitcoin over
the world and cannot suddenly create and cause inflation of Bitcoin. The major reason to
invest in Bitcoin is because it can hedge against inflation. Similar to gold, Bitcoin can be an
instrument to hedge inflation because the number and value of them are fixed. Financial
institutions are likely to invest Bitcoin other than gold because the CC (correlation
coefficient) between Bitcoin and the market is almost 0, it means the Bitcoin almost not be
affected by the fluctuation of the market. As a crypto currency, Bitcoin can be transferred
instantly any time, any place and just need to store digitally unlike the gold which needs to
spend much money on storing and securing. Also, Bitcoin is easy to divide into small units
and impossible to counterfeit based on the blockchain (Eli 2022).
Therefore, I will recommend that they invest RM2, 450.96 into Bitcoin every year because of
the following reasons. Firstly, investing only 5.395% of RM45, 450 annually into Bitcoin
looks very limited on investment but actually it is enough on the return. Based on the past
record, if you buy a Bitcoin In 2013, only for USD 250, currently you will become a
millionaire and earn (USD42,224.20-USD250) = USD41,974.20, a total return of 167.9
times! However, high returns means high risks. Even Kent is a risk taker, if Kent Lim and
Serene Tan invest a lot of money in Bitcoin, they have a big chance to lose all invested
money due to the huge volatility of the price actions, so putting more asset allocation into
other investments is the better choice.
Bitcoin has a huge potential growth in the future due to the advantages I stated above even if
it fluctuates between USD 30,000 and USD 60,000. Furthermore, its scarcity and many
individuals thinking about hedging and retaining value when there’s a lot of money printing
in the world will let it reach as high as USD300, 000 over the next several years (Prime
prediction 2021). As the image shows, the average annual return of the past 5 years from
2017 to 2021, is up to 312.86%. However, we do not expect Bitcoin can sustain such a high
return every year. To be conservative, we expect it only have 1/10 of the average annual
return (2017 to 2021) which is 31.29% in the next 18 years.
Thus, they can put RM2, 450.96 in Bitcoin every year assuming it will bring at least 31.29%
average annual return for 18 years. By the time they retire, they can receive RM 1,044,371.88
on the investment.
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2.2.5 Real Estate Investment Trust (REIT)
Lastly, real estate investment trust, or we call it as REIT is an investment similar to a unit
trust, it will pool the capital of numerous investors, but it invests in real estate properties
managed by a company and operates or finances to generate an income. It gives individual
investors an opportunity to invest in real estate and earn dividends without having to buy or
manage it. One of the features of the REIT is it can be traded like a stock, it means it has high
liquidity compared to the physical real estate. Unlike other investments, REITs have a very
straightforward business model like FD, leases space and sits down, collects the rents, then
distributes the dividends to the shareholders.
Therefore, there are some reasons why I suggest they invest in the REIT. It is easy to bull and
sell in the market, as most trade on public exchanges. Also, it provides a stable cash flow and
risk-adjusted returns. People may like to put REITs into their portfolio because of its
diversification, comparatively low correlation with other assets and dividend-based income.
Thus, I will suggest Kent and Serene to invest RM 9,000 into IGB Real Estate Investment
Trust (IGBREIT) every year. It is because Bitcoin, ETF and stock are higher risks, thus a
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lower risk investment like REIT is great for them to diversify the risk. For the average annual
return between 2017 to 2021, IGBREIT looked bad as its average annual return only had
1.8% due to the pandemic and Movement Control Order (MCO). However, the average
annual return before the pandemic was 9.9% from 2015 to 2019. Currently, the pandemic is
under control and economic is starting to recover from it. In the next few years, it is expected
that the financial performance of IGBREIT will recover to pre-pandemic level, therefore it is
a great opportunity to invest money into IGBREIT.
Assuming IGBREIT is able to recover to its pre-pandemic financial performance, I expect it

to generate an annual return of 10% in the coming years. Kent and Serene will get a return of
RM 410,392.56 after eighteen years by investing RM9, 000 per year into IGBREIT with 10%
average annual return.
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2.3 Conclusion
After adding all the investment and calculate the total return, we find out we have already hit
Kent and Serene’s retirement target of RM5,110,527.73 and have RM1,209,931.28 for the
extra surplus. Therefore, Kent and Serene’s retirement plan can be achieved and they can
have sufficient monthly expenses for 25 years of retirement life.
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Reference
1. Eli, T 2022, Should your Invest in Bitcoin for Retirement, viewed on 20 March 2022,
<https://www.coindesk.com/learn/2021/08/24/should-you-invest-in-bitcoin-for-
retirement/>.
2. Invesco 2021, S&P 500 GARP Index financial report, viewed on 22 March 2022,
<https://www.invesco.com/us-rest/contentdetail?
contentId=34cde97fa4bae410VgnVCM100000c2f1bf0aRCRD&dnsName=us>
3. PrimeXBT 2021, Bitcoin Price Prediction | Will Bitcoin Rise Once Again?, viewed on
22 March 2022, <https://primexbt.com/for-traders/bitcoin-price-prediction-forecast/>.
4. Simplywall.st 2022, RCE Capital Berhad, viewed on 22 March 2022,
<https://simplywall.st/stocks/my/diversified-financials/klse-rcecap/rce-capital-berhad-
shares#dividend>.
5. Will, K 2022, The S&P 500 Index: Standard & Poor’s 500 index, viewed on 22
March 2022, <https://www.investopedia.com/terms/s/sp500.asp>.
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3. Individual Assignment
3.1 Chong Yen Yen (21WBR13649)
The important of Will and Trust

Creating an estate plan most people were duped by the language because they assumed it
was solely for the rich. A simple definition of estate planning is the distribution of one's assets
after death (Chia n.d.). The person's inheritance will be dispersed to his or her beneficiaries in
accordance with the terms of his or her will or trust. Making a will and trust has the goal of
preventing family members from being entangled in court battles over inheritance rights
(Chan, MK 2015). Will and trust, on the other hand, are critical for each breadwinner to make
either will or trust, or both, as soon as possible.
Will
Under Wills Act 1959, it stated that the will-maker declares a will into effect upon his or
her death in respect of his assets, child’s guardianship, charitable causes and so forth
(Easylaw 2021). A will is a legal document which are written and signed by the testator in
exercise of a power through appointing an executor to declare the distribution of inheritance
after he or she passed away. The word "testator" refers to the owner of the assets, while
"beneficiaries" refers to the people whose names are included in the will and who would
profit from it in the end.
The importance of having a will for the couple is that it will speed up the probate
process. Whether or whether there is a will, all estates must go through the probate process. A
will helps the court understand their desires for the disposition of their estate. If the dead has
a will, the inheritance process normally takes 3 to 6 months to complete (Funeral Partners,
n.d.). Without a will, the probate court will have to help them manage the estate, which will
make the process more complicated and cause unnecessary delays in the estate
administration. They were unable to obtain the inheritance after a two- to three-year struggle
with the court and various government offices, as well as banks and other financial
39
organisations. In this way, a will simplifies the life of their heirs by reducing the amount of
energy and time required to complete the inevitable probate procedure.
A will are also important to couples. It is because having a will can reduce the chance of
family conflicts occurring. The distribution of inheritance after death is fraught with
emotions, and even minor disagreements can lead to resentment and recriminations among
family members (Hannibal, 2020). A divorce, for example, or a blended family will make the
estate division more difficult. If Kent Lim and Serena Tan write a will, it would likely lessen
family dispute since it will express their wishes and how they want their possessions
dispersed, eliminating disagreement and speculation about what they "might have" wanted
(Hannibal, 2020). In order to avoid family members squabbling over their assets, having a
will is essential.
The significance of having a will is that it allows the couple to name a guardian for their
children's money. If a spouse dies, someone will be responsible for their children's money if
they are no longer alive. It is possible to appoint the same person or a different person as their
child's personal guardian. Unlike their personal guardian, the court will usually accept their
choice of property guardian unless the person they choose is unavailable or plainly
incompetent. Any of their things that aren't already managed in another way will be cared for
by the property guardian for their children. To put it another way, the property guardian will
not handle property placed in a trust or custodianship for their children.
Trust
According to Lee, a trust is used to commence the transfer of property ownership and
income generated from the property to another party before, at, or after death (2021). A
fiduciary arrangement essentially permits a Trustee to keep assets on behalf of the
beneficiaries for an extended length of time. Which implies that while the grantor no longer
owns the assets once they are transferred to the trust, he or she can still exercise control over
them provided the grantor's instructions under the trust allow it. When there are minor
children who require cash for their education, medical care, and living expenses, a trust is
beneficial. People seek to set up a trust for a variety of reasons, including the fact that assets
held in trust will not freeze upon death, the ability to distribute money, and the protection and
preservation of wealth.
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One of the most important aspects of trust is that it allows you to manage your own
finances. Kent Lim has a strong understanding of the trust rules, which allows him to
determine when and to whom distributions are made. Kent Lim, for example, may set up a
revocable trust so that the trust assets are available to him throughout his life and the
remaining assets are assigned to whoever would inherit them after his death. Another
consideration is safeguarding your own legacy. A properly created trust might assist protect
his or her inheritance from creditors who are not financially sophisticated heirs or
beneficiaries (Fidelity, 2021).
Recommendation
In Kent Lim and Serena Tan case, I will recommend them to have both will and trust
for their estate planning. This is because the will permits Kent and Serena to select a guardian
for their kids, Aston if anything unexpected happens to Kent and Serena. However, since
Aston are still young, having a trust can make sure that Aston did not overuse the asset when
his parents happen any accidents. Thereby, I will recommend Kent and Serena to have both
will and trust.
The asset allocation will be faster and less expensive if Kent and Serena write a will,
which I recommend. When a will is present, the process takes only 3 to 6 months. Another
argument for endorsing it is that it has the potential to lessen family strife once Kent and
Serena pass away. If Kent did not make a will, his relatives would argue over asset
distribution, perhaps causing their relationship to deteriorate and lead to greater strife.
Furthermore, the Trustee of a trust will provide monies for a variety of family problems.
If Kent and Serena both died in an accident, the appointed Trustee will postpone the estate
distribution until Aston reaches a specific age or reaches a certain milestone. At the same
time, Aston's monthly or annual living costs are managed by the Trustee, who is an expert in
investing and trust administration. The Trustee will help with education and other monies in
addition to living expenses.
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3.2 Giam Co Nie (21WBR06155）
1. Discuss the importance of having Wills and Trust to the couple

1.1 what is will and trust
A will is a legally binding document. The court will deal with the estate according to the
will made by the deceased before his death. When making a will, the testator must be a sound
mind, at least 18 years of age, and his written and signed will, and have at least 2 witnesses
who are preferably 21 years of age to witness his signature. Then they must sign in front of
him and each other to ensure that his will is legally valid (Mah & Gan 2012). Furthermore, a
trust is a legal arrangement, and the trustor can appoint a trustee to help the beneficiary
manage the assets. The beneficiary of a trust can be the trustor himself or other persons
designated by the trustor. Some people may feel that their friends or relatives cannot be
trusted or justify their wishes. In this case, entrusting a trusts company as its executor and the
trustee is a better choice (Fidelity 2021).
1.2 The importance of having a will in estate planning

For individuals or families with large or different types of assets, a will is an important estate
planning. One of the importance of having a will is as testators, they are able to decide who
is the beneficiary of the estates after he or she dies. When the testator dies, the will's
executor will deal and be responsible for allocating these assets according to the will he made
during his lifetime. The testator can appoint anyone to be his executor to handles his or her
estates, including spouse, provided that the other party is of sound mind and has reached the
major age of 18 years old (Puvanesvaran 2021). Conversely, if the executor and the
beneficiary are not designated, there may be disagreements on the appropriate personal
representative of the will. Other than that, in the absence of a testamentary appointee, a
person who cannot be trusted is able to make a request to the court to appoint himself or
another person to inherit the estate.
Moreover, a will is very important to parents, because they are able to appoint a trustworthy
and legal guardian for their child, which can give them peace of mind. If one of the parents
dies, the surviving parent usually will obtain the sole legal custody of their minor child.
Assume that both parents of the child die before the child is 18 years old, it is vital to appoint
a guardian to raise his minor child. The court will arrange for the designated person to be the
guardian of the child according to the wishes of the testator in the will. However, if the party
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has not made a will or has not appointed a guardian in the will, the court will select a
guardian from the family or a guardian designated by the state. This may mean that his child
will be raised by someone he does not trust or who has only coveted his property (Findlaw
2018).
Besides that, having a will can reduce the possibility of family disputes over property
distribution. Because the will has clearly expressed the wishes of the deceased. The
inheritance rights of the legal beneficiaries will also be guaranteed. On the contrary, if a
person dies without a will, his family will have to guess what his ultimate wish is. Other
relatives or family members must have doubts about the results of the speculation. Due to
different people have different thoughts, and there is no way to know what the deceased
thinks. In the process of property distribution, there may have some relative’s frictions and
quarrels because they all want to take the inheritance as their own out of selfishness. Arguing
about suitable personal representatives is time-consuming, wasteful money, and also
completely destroyed the harmony of the family (Freewill 2021).
1.3 The importance of having a trust in estate planning

The importance of having a trust is to allow protect privacy because the assets will always
be held in the trustee’s name until the trust is terminated. The trust provides revocable and
irrevocable options for customers to choose from (Findlaw 2021). However, a testamentary
trust can be established by a trustor to incentivize a beneficiary to achieve specific goals,
such as earning a college degree and not being exposed to drugs or addicted to gambling.
If a trustor has more than one child, a testamentary trust allows him or her to distribute
assets to their children in a way that is fair and takes into account each kid's individual
requirements. For example, if one of the children develops a handicap or has an unanticipated
medical requirement, they don't want that child's portion to be diminished in comparison to
his or her siblings. Since the trust assets are not officially held by the children, a testamentary
trust prevents their children's inheritance from influencing their college aid eligibility
(NYMetroParents Staff 2019).
Additionally, the trustor can use the trust to set the asset allocation method or time
requirements. For example, the trustor designates his child as the beneficiaries of the trust.
He fears that the child will still be minors at the time of his death, and child do not have
sufficient ability or knowledge to manage their assets. Then he can entrust the trustee to
manage these assets on behalf of the child after his death, and the beneficiary can only inherit
some assets in the trust at every specified age with certain percentage of the asset (Carson
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2021).
Further to that, another importance of trusts is being able to promote family values.
Because it has the implementation of a mandatory savings plan. The plan can help with
education planning, retirement, health, and welfare. Not only can it convey the concept of the
importance of savings to the next generation, but it can also increase assets (Findlaw 2021).
2. Recommend estate planning to the couple

I would recommend them to have a both wills and trust. Kent can use his will to ensure that
their estate will not be taken away by relatives who look forward to it. In Malaysia, a will
does not need to be stamped to take effect. In addition, a Kent can use a will to ensure that
certain people will not confiscate any of his assets or property after his death. Because one
of the advantages of a will is that only the beneficiaries specified in the will are eligible to
inherit or take over the estate. Only in the absence of a will, the estate will be automatically
distributed in accordance with the Section 6 Distribution Act 1958 (Puvanesvaran 2021).
Moreover, Kent and Serene can nominate the legal guardians who they trusted to take care
of their child, Aston by establish a will. Generally, the guardian will raise their child and
provide with necessities such as education, food, clothing, shelter, and health care.
Meanwhile, Aston can feel at ease because he does not need to worry about how he is going
to survive after losing their parents.
Other than that, they also can consider to set up a testamentary trust which is one of the types
of the trust because if Kent has a second kid in the future, a testamentary trust allows Kent to
distribute assets to his children in a way that is fair and takes into account each kid's
individual requirements. For example, if Aston develops a handicap or has an unanticipated
medical requirement, it will provide proper funds to meet his need without taking away the
part other children are entitled to in the trust.
In addition to safeguarding the beneficiary's interests, creating a testamentary trust can aid in
the management of Kent's assets until Aston, the beneficiary, reaches the age of 18. As a
result, the risk of Aston being robbed of all his riches owing to his lack of social experience is
reduced. Furthermore, Kent can calculate the beneficiary's living expenditures for each
successive year when the beneficiary reaches 18, ensuring that Aston does not acquire a
spending habit.
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3.3 Kishan Danniel bin Hussen (21WBR11396)
1.0 Wills and trust
Wills and trusts, in general, are both estate planning vehicles that assist to safeguard
an individual's assets while also granting them to his or her heirs. However, there are
several crucial differences between wills and trusts.
1.1 Wills in estate planning
A will is a legally enforceable document that allows a person to specify how his or her
estate will be dealt with after death. It is one of the most crucial aspects of financial
planning. It is based on the testator's desire to control the distribution of the
inheritance. For example, naming guardians for minors and deciding to hand
over assets and monetary belongings to an individual or charity for whom he or she is
responsible.
1.2 Importance of having a will for Kent and Serene
Being aged 37 and 32, Kent and Serene are young parents to a 5-year-old. Besides
that, they own two properties amounting up to RM1.42 million therefore, it is
essential for them to have a will. There are several importance of having a will,
among them are as follows:
i. Distributions of possessions
One of the reasons Kent and Serene need wills is to guarantee that their
belongings are distributed according to their preferences. Kent and Serene should
be aware that if they die without a will, their possessions will be dispersed
according to the law and not according to their preference. For example, if Kent is
met with an unfortunate incident that leads to his death, all the properties that he
owns would not be transferred to an individual according to his desires since he
did not write a will. Besides that, Distribution Act 1958 makes it even complicated
as the court might distribute Kent’s properties to his parents, Serene and Aston and
other joint owners if present. As a result, the only way to ensure that their desires
are carried out is to write a will.
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ii. Legal guardian for minor if both parents die
The next importance is for Kent and Serene to be able to name the guardian they
want to appoint for their son, Aston Lim, in a written will. Since they have a
young son aged only 5 years old, having a will for Ben and Bella is highly crucial.
If a guardian is not assigned at the time of Ben and Bella's deaths, their remaining
relatives will have to seek assistance from a probate court in order to have Aston
Lim' guardians to be appointed. In many cases, the guardian appointed might not
be the person that the parents desire to hand over their child to. Therefore, a will
stating a legal guardian for their son is important.
iii. Expedite relevant legal processes
Another reason Kent and Serene require wills is to speed up the legal procedure.
The distribution of an estate can be sped up and made less expensive with a proper
will. Meanwhile, a will aids in the reduction of legal expenditures, preserving the
value of their property and allowing savings to be passed on to their heirs.
Although the executor must still wait for approval from the court to carry out
their will, obtaining a Grant of Probate is far faster than asking for a Letter of
Administration (Khai, 2020). In other words, a will permits the executor to
transfer their assets according to their preferences far faster than the process
without a will.
2.0 Trust in estate planning
A trust is a fiduciary relationship in which a person entrusts another party with the
responsibility of managing and conserving property and its income on behalf of
beneficiaries over a lengthy period of time. A trust is also active the day it is created,
and a grantor can use it to list the distribution of assets before they pass away.
2.1 Importance of having a trust for Kent and Serene
i. Avoid probate process
Unlike wills, trusts do not usually require probate for the authentication and
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distribution of the testator's estate. As a result, Kent and Serene's main priority in
creating trust is to prevent and expedite the probate procedure for their loved ones
once they pass away. As a result, a trust is typically a quicker and easier way to
transfer the testator's assets after his or her death. If Kent and Serene decide to create
trusts, they will save time by skipping the probate procedure because they will only
have to deal with their trustee and attorney to complete the arrangement.
ii. Customizing own estate plan
Another benefit is that Kent and Serene will be able to create their own inheritance
plan. For example, whether they create a trust through his or her will or through a
separate trust agreement, trusts always allow individuals to really customise their
estate plan. In other words, they might include clauses such as age requirements or
precise guidelines for how their children spend their inheritance (U.S. Bank 2021).
For example, Kent and Serene may specify that the money in a trust be transferred to
their child, Aston, after he reaches the age of 18, and that it only be used for further
study purposes. They can also opt to set a restriction on how much money their
child can receive from the trust each year if they believe their child require further
financial assistance.
iii. Testamentary trust
A testamentary trust might aid in the protection of their estate. The trustee can assist
them in managing their property, even though it is in Aston Lim’s name, in order to
safeguard the assets. This is due to the fact that Aston is only 5 years old and hence
may not be entitled to possess the property. As a result, the trustee can assist the
child in managing their property, and the property will be returned to Aston once
he reaches the age of majority, which is 18 years old. Furthermore, the trustee has to
be well-versed in property management in order to generate income and protect the
value of the property until Aston turns 18.
3.0 Recommendation for Kent and Serene
I will advise Kent and Serene to go for both estate planning instruments, wills and
trusts, because they have various characteristics that compliment one other. Both wills
47
and trusts preparation are important for them after they have worked so hard for their
money. Kent and Serene will not be able to ensure that their money and assets flow to
the people they choose in their wealth succession planning if they don't use any of
these methods.
For instance, if the couple dies without a will, their estate and the guardianship of
their minor child, Aston, may be decided under their state's intestacy rules. Also,
protracted legal disputes and financial hardship for their family members are possible
outcomes. Especially if Kent and Serene's family dynamics are problematic. In
summary, a will may assist the couple in distributing their assets as they see fit, as
well as appointing a guardian for their young child when they pass away, something a
trust cannot do. A trust, on the other hand, can greatly broaden Ben and Bella's
options when it comes to asset management, such as shielding their money from
taxes, something a will cannot.
A trust, unlike a will, can allow people transfer assets from one person to another
discreetly and without exposing them to the public. That is why I believe Kent and
Serene should have both estate planning documents methods. In conclusion, the
couple have property and assets to place in a trust, as well as a young child, so using
both estate-planning vehicles makes sense in their situation.
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3.4 Soo Jing Kai (21WBR13652)
Will
A will is a legal document that set up or active the wish for the distribution of
properties or assets and the care for minor children upon the Kent Lim and Serene Tan
passed away. If they did not set up the will, their wishes may not be fulfilled and their
heirs- Aston may need spend some addition times, money and emotional energy to
settle down their affairs. In Malaysia, will is just applicable for non-Muslim and need
some fees to set up it. Under the Malaysian Wills Act 1959 defines the will as a
declarations intended give legal effect to the will of the testator with respect to his
property or other matters and active after his death. Thus, For Muslim, they need to
set up an document call “Waisat” works as a tool of promise for the deliverance of the
estate to the persons names in the “Waisat”, similar as non-Muslim’s will reference
under Muslim Wills (Selangor) Enactment 1999. If Kent and Serene Death without
their will is intestate and your value asset or cash will be distribute to your relation
people majorly are your: parents, children and spouse with specific percentages
follow by the law (iproperty, 2019). Also, without will, their estate will be frozen until
the case is settle, and their child Aston need spend much time and money on it.
Secondly, they can determine a guardian for their child- Aston that still minor that
below 18 years old as provided in Section 2 Age of Majority Act 1971. Assume that
Kent and Serene pass away without will, there is no certainty who will be responsible
for the care of Aston. Mostly, the government will appoint their relative like aunty or
grandparents to looking after their children and it may not the first choice or people
who do not want to look after Aston. Or even the worst, Aston will move around from
person to person until the government appoint a guardian.
Thirdly, without a will, family members may disputes for the heritages of the testator.
After the person death, the will shall secure under the law and the asset will
49
distributed that stated in the will and family members can just follow the instruction in
the will (Legalsmart, 2019). Thus, family members need spend a lot of time and
money on the disputed about the assets distributed as it may involve the services of
lawyers and engage in a lawsuit, it generally takes about 6 to 9 months.
Trust
Trust is a document that give the third party knows as trustor, give one of the party,
trustee the right to hold title to property or assets for the benefit of a third party
(beneficiary). The trustee is obliged to deal with the trust assets in accordance with the
terms of the trust document and solely in the best interests of the beneficiaries. The
trust can effective upon the transfer of assets to them unlike the will take effect upon
the testator death. Normally, trust is used in estates like: life insurance or a piece of
property planning and distribution to benefit, rather than the sum total of testator
holding. Also, trust can alter, amend or terminate at any time during their lifetimes,
but will cannot simply change the content of it.
People may like to create a trust and put their heir like children or spouse as the
beneficiary as the owner of the trust assets for tax purposes. Income Tax Act 1967
says, not a deductible expense in arriving at the total income of a trust body and is not
subject to income tax. The estate tax is depends on the total value of the asset and will
changeable appreciation rate years to years which will increase the taxable rate. After
the trust is create, the assets will transfer under the name of trustee and avoid the
taxable cost, so many rich man use this ways to decrease the tax (M. Jarrell, 2022).
However, normally, trust cannot names guardians for the minor children unlike the
will. Furthermore, will may be public in some place, people may prefer choose trust
as they don’t want their wills publicly posted. One of the types of trust calls
testamentary trust can determine the guardian of their minor children.
Testamentary trust, also known as will trust or trust under will, which is trust created
inside the will and take effect until testator death. The trust is essentially part of a set
of instructions in a testator’s will, drawn up by a predetermined representative known
as an executor. The assets of the deceased will be transfer to the newly created trust
50
only after the decreased dies. The testamentary trust also established so the deceased’s
assets are paid or transfer to the beneficiaries only when certain conditions have meet.
Recommendations
I will suggest them set up will and trust necessary. Kent and Bella have a minor
children and they is an upper class family (T20) with salary of RM 13,500+ RM5, 000
=RM18500 more than RM10, 970 (Loanstreet, 2022). No one can predict future as
accident or tomorrow will come, will can protect their interest and their children in
case of both died unexpectedly. They can create a will and appoint guardian or
someone who care about their children for their children’s future life after they died.
However, will is publicly and they might not like everyone know and cause people go
through probate after they died. If their will did not stated their asset distributions
clearly, it might cause their relative have an opportunity to obtain their assets. So, the
testamentary trust can be establish with instructions how the assets will manage and
would only be distributed to their son Aston following a specific milestone like
become majority. Moreover, consider their assets need a person to continuing invest
and appreciation, they may need to appoint a person stated in testamentary trust. Even
the trust may need a cost to set up, the cost would come out of the decedent’s estate,
but I think they can handle the cost as they are T20 family.
In the nutshell, establish will and trust can maximize protect their wealth, privacy and
future interest of their child.
51
3.5 Yap Zhi Hang (21WBR13564)
Importance of Wills and Trusts in estate planning

Estate Planning
When a person passes away, all his assets including property, car and bank
accounts will be frozen. Therefore, it is crucial to plan your estate when you are alive.
Estate planning is the process of developing plans and arranging during a person’s
lifetime to accumulate, preserve and distribute the wealth or estate of that person on
his death according to his wishes to the intended beneficiaries, while maintaining
taxes and transfer costs (MyPF n.d.). Estate planning seeks to protect the assets of a
person against the claim of unintended beneficiaries to preserve them for the chosen
recipient. A person can provide for those he leaves behind when he is no longer
around in the desired proportion and manner with estate planning. In estate planning,
will and trust are two vital tools to assist an individual in distributing wealth to the
beneficiaries.
Importance of Wills
A will is a legal document that outlines how a testator intends to have his
assets distributed and other matters take effect after deceased, until which time it can
be revoked (Oon 2017). Section 2 of the Wills Act 1959 defines will as a declaration
intended to have legal effect of the intentions of a testator with respect to his property
or other matters which he desires to be carried into effect after his death and includes
a testament, a codicil and an appointment by will or by writing in the nature of a will
in exercise of a power and also a disposition by will or testament of the guardianship,
custody and tuition of any child. It is important for Kent and Serene to have a will
because:
1. The testator decides who gets what

An important part of a will is about the distribution of the assets. The testator,
52
which is the person making the will, will be able to nominate the beneficiaries to
receive his distributed assets. The testator also can decide how his assets are to be
distributed (Oon 2017). This can protect the assets from unintended beneficiaries to
claim it before the chosen recipients.
2. The testator is free to appoint his or her executor of choice

The testator will be able to appoint an executor to carry into effect his
intention upon his death. An executor is empowered by the law to undertake any
action on behalf of the testator when he passes away. For instance, passing a proper
title of the property to the intended recipient. The law states that the executor shall be
indemnified from the estate of the testator, making him immune from all testatorial
liabilities. Therefore, after the death of the testator, the executor’s application to the
High Court for grant of probate not only formally establishes his power over the
affairs of the testator, and allows them to be protected under the executor (Chia, Lee
& Associates n.d.).
3. The distribution of assets is faster and less costly

Furthermore, making a will would expedite the testator’s will to take effect
after his death, as it only takes about one month from the date of the testator’s death to
apply for the grant of probate. The process of assets distribution can be hastened and
the cost of estate administration can be reduced as well (Phui 2021).
4. A will allows them to create a testamentary trust

A will enables the testator to set up a testamentary trust for his spouse,
children or heirs. A testamentary trust is provided for in a will, whereby the testator
appoints a trustee to manage the funds in the testamentary trust during the trust period
until the beneficiary is eligible to receive the funds. Such trust will only come into
effect upon your death. A testamentary trust is particularly useful if you have children
who have yet to attain the age of eighteen. You may appoint and/or elect anyone as a
trustee, but he or she should be a person whom you think will act in the best interest
53
of your beneficiaries. Your trustee will also be subjected to the responsibilities
imposed by the Trustee Act 1949. However, if the person you appointed as a trustee
refuses to take on the role, another person may volunteer, or the court will appoint
another trustee under Section 45(1)(a) of the Trustee Act 1949 on its own (Phui 2021).
5. The testator determines who will look after minor children

It is also vital that a will allows the testator to choose the guardian of his
children when he is no longer around to take care of them (Raymond & Gan 2020).
The guardian will administer your assets for your children until they attain the age of
majority. Once your children reach the age of majority, the guardian must transfer all
of the property to your children. However, if the children pass away before attaining
the age of majority, all of the assets held in guardianship for them will form part of
their estate.
6. Family conflicts will be minimised

The division of assets among family members sometimes entails a myriad of
emotions, with most mired in animosity and bitterness. Since the distribution of assets
has been stated clearly in a will, the chances of family disputes over the assets can be
minimised.
Consequences of not having a will

1. No control over distribution of assets
However, if a person dies intestate, some practical issues might arise. Firstly,
upon death, the assets of that person will be distributed according to the law following
Distribution Act 1958, instead of according to his wishes or the needs of his family
members (PropertyGuru 2020). One of the family members will then need to apply to
the High Court or Land Office through the District Land Administrator for a letter of
administration and distribute the estate according to the law.
2. Possible family disputes

54
There may be added pressure on your surviving spouse, family, and relatives
(heirs) to spend additional time, money, and emotional energy to settle your affairs
because information on your intentions was unknown at the time of death.
3. No control over guardian for minor children

The court will appoint a guardian for your minor children, and the person
appointed may not be at your desire (Oon 2017). The court will appoint an
administrator under Section 30 of the Probate and Administration Act 1959 who can
act as a guardian. Alternatively, the court will appoint a guardian under Section 8 of
the Guardianship of Infants Act 1961 to look after your children. Similarly, family
disputes may arise as to who is the most appropriate guardian.
4. Lengthy distribution process and higher costs

The administrator needs to appoint two sureties to guarantee the proper
administration of the estate. There is a requirement that the sureties must have owned
assets equivalent to the gross value of the deceased’s estate in order to enter into an
administrative bond. The distribution process would take 3 to 6 months on average
due to the legal procedures involved in the High Court, which is longer than when one
has a will. If one were to apply to the Land Office for a letter of administration, the
entire process might take at least six months on average. The distribution process will
also cost more (Raymond & Gan 2020).
5. No control over appointment of executor

The court will have the discretion to grant the Letters of Administration to the
person that the High Court Judge thinks fit to administer your estate. However, this
may give rise to disputes between family members or beneficiaries on who should be
selected to take on this role (Chia, Lee & Associates n.d.).
55
Suggestion for Kent and Serene
Kent Lim and Serene Tan should utilise will in their estate planning. A will can
bring a significant impact to Kent and Serene especially if they both die
simultaneously and leave their child, Aston alone. Assuming that Kent and Serene
have been killed in an accident and left Aston alone. They did not make a will when
they were alive. Their assets will be distributed according to the Distribution Act
1958. Moreover, the court will appoint a guardian to take care of Aston since he is a
minor. The distribution process can go up to 3 to 6 months. Nevertheless, all of these
could’ve been prevented if Kent and Serene had set up a will when they were alive.
They can distribute their wealth to their beneficiaries at their desire, who is likely to
be Aston. Kent and Serene can appoint an executor to take care of their end-of-life
affairs such as assets distribution. Upon the death of Kent and Serene, the executor
will then assist in passing the property’s title to Aston. Moreover, they will be able to
appoint a guardian to take care of Aston. The nominated executor can execute Kent
and Serene’s wishes according to their will roughly one month from their death after
the grant of probate is obtained. This is way faster than if they do not have a will. The
appointed executor will also hold a funeral for Kent and Serene according to their
wishes.
Importance of Trusts
A trust is a legal relationship that facilitates the transfer of property and the
income from that property to another party. It manages and conserves property on
behalf of beneficiaries over a long period of time. A trust is a legal arrangement
through which your assets are held by a trustee for your benefit or that of your
beneficiaries. The trust will become the legal owner of your assets once you pass
away. In fact, as soon as you create the trust, your assets automatically become part of
it (Lydia 2021). It is important for Kent and Serene to set up a trust because:
1. Maintain privacy and confidentiality

A trust usually covers the estate’s finances while keeping your personal
56
financial information confidential. Your finances will stay private even after your trust
has passed outside of probate (Ron 2020).
2. Maximise flexibility
A trust is important in many ways and can bring a massive difference to an
individual upon death. In comparison to a will, a trust provides greater flexibility. A
trust allows the property to be held for a longer time and distributed at various stages
instead of one lump sum. Besides, you can appoint a trustee to assist the beneficiaries
in making wise decisions (Ron 2020). By doing so, you can avoid the beneficiaries
from misuse of your assets.
3. Take care of your minor children

A trust can also help you to make sure the beneficiaries who are minors
receive regular payments especially if both husband and wife pass away at the same
time. When the minor child reaches a specified age, the balance of the assets could be
given to him. You can manage the benefit payout according to your beneficiaries’
needs and circumstances such as to finance for medical bills and pay for education
fees. A trust could assist you in ensuring that your property is distributed in the
manner in which you would have done it if you had lived to see your children grow
up (MyPF n.d.).
4. More protection against challengers

A trust offers more protection against challengers as it is more difficult and
costly to challenge a trust. A trust clearly states your wishes for your beneficiaries
which reduces the chances of misunderstanding. It will also be harder for the
challengers to prove that you were forced to sign the documents for setting up the
trust (B.K. Sidhu 2021).
57
5. Avoid probate
Immediacy is a benefit of setting up a trust. The assets are immediately
distributed after death without having to go through the probate process as opposed to
a will. A trust nominates a trustee who can quickly take care of your end-of-life affairs
including funeral costs and property distribution without having to wait for the order
granted by a probate judge. This can be very helpful especially when you have a
minor child whereby you can deal with your child’s basic maintenance, education and
living expenses immediately (B.K. Sidhu 2021).
Suggestion for Kent and Serene

Kent Lim and Serene Tan should utilise trust in their estate planning. A trust
can bring a huge impact to Kent and Serene especially if they both die at the same
time and leave their child, Aston alone. Assuming that Kent and Serene have died
from an accident and left Aston alone. They did not make a trust when they were
alive. Their assets will be distributed according to the Distribution Act 1958.
Moreover, the court will appoint a guardian to take care of Aston since he is a minor.
The distribution process can go up to 3 to 6 months. Nonetheless, all of these could’ve
been prevented if Kent and Serene had established a trust when they were alive. They
can distribute their wealth to their beneficiaries at their desire, who is likely to be
Aston. Not only that, they have the discretion to specify that the assets are to be
distributed over multiple stages. For instance, they can state that Aston can receive
RM1,000 every month as pocket money, pay for Aston’s university fees when he
enrols in one, and distribute the balance to Aston when he reaches the age of 25. A
trust makes it possible for them to take care of Aston as if they are still alive. They
can also avoid Aston from misusing the money by this. Moreover, they will be able to
appoint a guardian to take care of Aston. Furthermore, Aston can receive the specified
assets immediately after Kent and Serene deceased because a probate process is not
required for a trust. Since Aston is still a young kid, he would not be able to hold a
funeral for his parents. This is when the trustee that Kent and Serene nominated in the
58
trust comes in and holds a funeral for them.
Individual Reference
Chong Yen Yen
1) Chia, SY n.d., An Overview of Estate Planning Malaysia, viewed 10 March 2022,

<https://chialee.com.my/an-overview-of-estate-planning-in-malaysia/>.
2) Chan, MK 2015, Estate Planning in Real Life: Why It Matters To You?, viewed 11
March 2022, <https://www.3age.com.my/estate-planning-in-real-life/>.
3) Easylaw 2021, Wills Act 1959, viewed 13 March 2022,

<https://www.easylaw.com.my/statutes/general-litigation/wills-act-1959>.
4) Funeral Partners, n.d, How does a Will work after death? , viewed 15 March 2022,
<https://www.funeralpartners.co.uk/help-advice/cost-of-a-funeral/how-does-a-
will-work-after-death/>
5) Betsy Simmons Hannibal, 2020, Why is a Will Important? viewed 13 March 2022,
<https://www.lawyers.com/legal-info/trusts-estates/wills-probate/why-is-a-will-
important.html>.
6) Lee, L 2021, Wills and Trusts, viewed 10 March 2022,
<https://www.redcover.com.my/wills-and-trusts-planning/>.
7) Fidelity, 2021, What is a trust, viewed 17 March 2022,
<https://www.fidelity.com/life-events/estate-planning/trusts>
Giam Co Nie
1) Carson, R 2021, Do You Need A Trust? 8 Important Goals A Trust Can Help You
Achieve, viewed 10 March 2022,
<https://www.forbes.com/sites/rcarson/2020/02/24/do-you-need-a-trust-8-
important-goals-a-trust-can-help-you-achieve/?sh=716bd5b852d4>.
2) Fidelity 2021, What Is a Trust?, viewed 11 March 2022,
59
<https://www.fidelity.com/life-events/estate-planning/trusts>.
3) Findlaw 2018, Top Ten Reasons to Have a Will, viewed 10 March 2022,
<https://www.findlaw.com/estate/wills/top-ten-reasons-to-have-a-will.html>.
4) Findlaw 2021, What is a trust?, viewed 13 March 2022,
<https://www.findlaw.co.nz/articles/4238/what-is-a-trust.aspx>.
5) Freewill 2021, The 10 most important reasons to have a will, viewed 13 March
2022, <https://www.freewill.com/learn/10-reasons-to-have-a-will>.
6) Puvanesvaran, K 2021, Enforcing Your Will, viewed 15 March 2022,
<https://www.thomasphilip.com.my/articles/enforcing-your-will/>.
7) Estateplanning, 2020, which type of trust protect against creditor , viewed 18
March 2022 <https://www.estateplanning.com/which-type-of-trust-protect-
against-creditors>.
8) NYMetroParents Staff 2019, The Importance of and the Different Types of Trusts,
viewed 14 March 2022, <https://www.nymetroparents.com/article/the-importance-
of-and-different-kinds-of-trusts->.
Kishan Danniel Bin Hussen
1. Khai, R.H 2020, Grant of Probate vs Letter of Administration In Malaysia:

What Are The Differences, viewed on 21 March 2022, <
https://simrahman.com/estate-planning-lawyer-in-malaysia/grant-of-probate-
vs-letter-of-administration-2/>.
2. U.S. Bank 2021, 5 Potential Benefits of Setting up a Trust, viewed on 21
March 2022, <https://www.usbank.com/wealth-management/financial-
perspectives/trust-and-estate-planning/benefits-of-setting-up-a-trust.html>.
Soo Jing Kai
1) Iproperty, 2019, “What happen to your property if you die without a will in
60
Malaysia”, viewed on 20 march 2022, <
https://www.iproperty.com.my/guides/who-inherits-your-property-if-you-pass-
away-without-writing-a-will/ >
2) Legal smart, 2019, “The importance of having a Will in Malaysia”, viewed on 20
March 2022, <https://legalsmart.my/importance-will-in-malaysia/>
3) Matthew. Jarrell, 4 January 2022, “Will vs Trust: What’s the difference”, viewed
on 20 March 2022, <
https://www.investopedia.com/articles/personal-finance/051315/will-vs-trust-
difference-between-two.asp >
4) Loanstreet, 22 February 2022, “Malaysia’s income classifications: What’s B40,
M40 & T20”, viewed on 22 March 2022, < https://loanstreet.com.my/learning-
centre/malaysia-household-income-classification-b40-m40-t20>
Yap Zhi Hang
1. B.K. Sidhu 2021, Living trust in estate planning, viewed 18 March 2022,
<https://www.thestar.com.my/business/business-news/2021/12/06/living-trust-
in-estate-planning>.
2. Chia, Lee & Associates n.d., An Overview of Estate Planning in Malaysia,
viewed 15 March 2022, <https://chialee.com.my/an-overview-of-estate-
planning-in-malaysia/>.
3. Lydia, C 2021, Trust vs Will: Which one should I use for estate planning?,
viewed 19 March 2022, <https://simrahman.com/estate-planning-lawyer-in-
malaysia/trusts-wills-estate-planning-malaysia/>.
4. MyPF n.d., Estate Planning, viewed 12 March 2022,
<https://mypf.my/risk/estate/estate-planning/>.
5. MyPF n.d., Setting up a Trust for Estate Planning, viewed 16 March 2022,
<https://mypf.my/risk/estate/trust/#:~:text=A%20Trust%20is%20a
%20useful,family%20members%20or%20illegitimate%20children.>.
61
6. Oon, HL 2017, Making A Will – Why Is It Necessary?, viewed 14 March 2022,
<https://www.skrine.com/insights/newsletter/september-2017/making-a-will-
%E2%80%93-why-is-it-necessary>.
7. Phui, KL 2021, Malaysia: Why Do I Need A Will? What Happens If I Die
Without A Will?, viewed 20 March 2022, <https://www.mondaq.com/wills-
intestacy-estate-planning/1022946/why-do-i-need-a-will-what-happens-if-i-
die-without-a-will?type=mondaqai&score=74>.
8. PropertyGuru 2020, All You Need to Know About Wills in Malaysia and the
Wills Act, viewed 17 March 2022,
<https://www.propertyguru.com.my/property-guides/what-to-know-wills-in-
malaysia-and-wills-act-17284>.
9. Raymond, M & Gan, CC 2020, Malaysia: Wills In Malaysia, viewed 16
March 2022,
<https://www.mondaq.com/wills-intestacy-estate-planning/967478/wills-in-
malaysia>.
10. Ron, C 2020, Do You Need A Trust? 8 Important Goals A Trust Can Help You
Achieve, viewed 19 March 2022,
<https://www.forbes.com/sites/rcarson/2020/02/24/do-you-need-a-trust-8-
important-goals-a-trust-can-help-you-achieve/?sh=758edc4d52d4>.
62
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BBMF2113 PERSONAL FINANCIAL PLANNING

Academic Year 2021/2022

Students’ names Students’ ID Nos.

Overall feedback (e.g. strengths, weaknesses, areas for improvement etc) :

1. Chong Yen Yen 21WBR13649 yen .

Programme Bachelor of Finance and Investment

Assignment Name: Name: Name: Name: Name:

Name of student Total team member % contributions * Signature

Discussion -No -Lack -High -Innovative and 10%

Discussion -No -Lack -High -Innovative and 20%

STATEMENT OF CASH FLOW

1.2 Net Worth Statement of Kent Lim and Serena Tan

STATEMENT OF NET WORTH

1. Kent Lim’s annual salary = Monthly gross income x 12 months

Kent Lim = Monthly tax reduction x 12 months

Serene Tan = Monthly tax reduction x 12 months

3. Transport allowance = Kent Lim’s annual gross income × 10%

4. EPF for Kent Lim = Kent Lim’s annual income × 11%

5. Cash payment for mortgage

A year is 3,157 x 12 = RM 37,884

Kent Lim’s annual premium

7. Maid’s salary = Monthly salary × 12 months

10. Household spending:

Dining out = Monthly dining out spending × 12 months

11. Children’s expenses:

Kindergarten fee = Monthly cost x 4 terms

12. Utilities bill

ii. Water bill = Water bill × 12 months

13. Mobile phone bill:

Serene Tan’s = Monthly phone bill × 12 months

14. Outstanding house loan

P1-P72, loan balance = 413,530.67

1.3.1 Basic Liquidity Ratio

= Cash/Cash Equivalents / Monthly Expenses

= 225,000 / (185,059 / 12)

1.3.2 Liquid-Assets-to-Net worth Ratio

= Liquid assets / Net Worth x 100%

= 225,000 / 1,200,026 x 100%

= Savings / Gross Income x 100%

= 18,450.96 / 203,510 x 100%

1.3.4 Debts-to-Assets Ratio

= Total Debts / Total Assets x 100%

= 1,331,474 / 2,531,500 x 100%

1.3.5 Debts Service Ratio

= Total Annual Loan Repayments / Annual Take Home Pay x 100%

= (25,555.92 + 37,884 + 30,800) / 203,510 x 100%

1.3.6 Non-Mortgage Debts Service Ratio

= Total Non-Mortgage Loan Repayments / Annual Take Home Pay x 100%

= 30,800 / 203,510 x 100%

1.3.7 Net Investment Assets to Net worth Ratio

= Net Investment Assets / Net Worth x 100%

= 1,406,000 / 1,200,026 x 100%

1.4 Current financial situation analysis

2.1 Retirement needs

Step 2: Calculate the present value of their retirement needs.

KLSE share RM97,000

Unit Trust RM57,000