Title: Personal Financial plan Essay Example

Title: Personal Financial plan

Current situation

I earn $20,000 per year and I earn additional $2000 from odd jobs. I spent $11,000 on rent, electricity, food, and transport. I save $5000 every year and use $1000 to repay my education loan. I would avoid a default account for my superannuation in the work place to avoid being caught with time before I raise enough money for my retirement. My superannuation is a super fund with the balanced option. I intend to reap reasonable returns while minimizing the risk of losses during bad times (Leow, Murphy &
Hooper, 2009). Investment is majorly in property and shares.

Goals and objectives

I intend to further my education to masters’ level and to undertake some professional courses in order to increase my chances of being absorbed in the job market and rising up the ladder of my career. I intend to save $70,000 for deposit for a mortgage since I look forward to owning a home. I want to retire at 63 year and have time at least to go on Safari tour in Africa for some months.

Attitude towards risk and return

I am a person who worries about bad events that may lead to losses but I take on risky ventures with full knowledge of any eventualities that may be unfavorable to me. I understand that when an investment is successful there will be returns that will overturn the previous anxiety into satisfaction and sense of triumph. Being risk averse denies one the capacity and the courage to invest in profitable projects. Choosing the balanced super fund as my superannuation shows that I am a careful spender who would not like to be overtaken by events in case of adverse economic situations.

Strategies to meet goals and objectives

One of the strategies will include investing in shares and government securities to increase my income. I need to meet my financial obligations with minimum risk and careless ventures. I will minimize my expenditure during vacation and opt for someone close home of visiting a relative or a friend to minimize cost. I need to save enough for my medical cover, emergency and the needs of my family. Short time goals and objectives have to be in line with the long-term strategic plan of my life.

Risk associated with
each strategy

Investing in shares has to be prudently done owing to reduced public confidence following the events following the widely experienced Global Financial Crisis. Shares prices are volatile and can be affected anytime by negative publicity about the company engagements. Consequently, it is crucial to dig into the history of the company to evaluate whether the company has a history of wrong understanding that may jeopardize its current position. Government securities are less risky but they may take a long time to mature (Mittra et al, 2007). Time value of money may be affected by inflation hence making the return from the investment less attractive in the long term. The global economic situation will determine my financial position in future. The unpredictable financial situation in the world may affect my personal expenses and make me end up spending more than I had budgeted for.

Actions required in implementing the financial

I will be keen to budget for everything I do and have a clear record of my expenses. Diversification of my investment in property and shares will reduce risk and ensure that I reap returns from the highest earning project. I will have to monitor the performance of shares and invests in shares that show growth and minimum risk (Marriott, 2010). I would I avoid any careless ending to people who have no intention of paying back the money. I assume that the inflation rate would be about three percent per year. I will engage the services of a financial planner to help my objectives towards my long term goal.

Projection in 5 to 10 years

In five to ten years to come, I project that I will completely be done with my education. I will be through paying my education loan and hopefully married. I would be closer to owning a home in the next like half a decade time. My superannuation would have grown close to a third of what I require in my retirement. I hope that I would have rose through the ladder in my career and earning a substantial amount to finance my dream after and before retirement.

My financial plan will change if I inherit $250,000. Instead of buying a house I can opt to build one from scratch. Moreover, I can have money to invest in either government securities or the stock market exchange. I will need to invest in projects that will be bigger than before but I will cautious of the risk involved and seek the advice of a financial planner before going ahead with anything. I would have to consult extensively and learn about all risks involved in the stock market exchange. The government securities contain less risk and will be my priority. I will accelerate my repaying of my education loan and perhaps marry earlier than I had planned. $250,000 will play a big role in helping me to achieve my long term objectives and goals. I will achieve my goals in a short term in case of this windfall than I had anticipated. Inheriting $250,000 will be important towards my long term objectives and living a comfortable live after retirement. I can invest in high risk ventures that realize returns within a short time. This amount of money will assist in creating more alternatives for investing than before. Instead of saving $5,000 per year, I would have to save $10,000 and even increase my super fund balance in order to attain what I need in my retirement within a short time.


Leow, C.J., Murphy, S. &
Hooper, G., 2009, Australian Master Superannuation Guide 2010/11, Melbourne: CCH Australia Limited.

Mittra, S., Sahu, A.P., & Robert, Crane, A., 2007, Practicing Financial Planning for Professionals (Practitioners’ Edition), 10th Edition, Rochester Hills Publishing, Inc.

Marriott, L., 2010, The Politics of Retirement Savings Taxation: A Trans-Tasman Comparison, Sydney: CCH Australia Limited.