FIN 533 Individual Assignment PDF

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PERSONAL FINANCIALPLANNING(FIN 533)FAMILY FINANCIAL PLANNING OFEN KU AZMI FAMILYPREPARED BY: KU MIZA SYAKIRAH BINTI KUAZMI2019612134PREPARED FOR: MADAM SITI HAJAR YUSOFTABLE OF CONTENTBIODATA OF THE FAMILYEn. Ku Azmi bin Ku Abdullah is currently working in a private company which is Indah Water Kons...

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PERSONAL FINANCIAL PLANNING (FIN 533) FAMILY FINANCIAL PLANNING OF EN KU AZMI FAMILY PREPARED BY: KU MIZA SYAKIRAH BINTI KU AZMI 2019612134 PREPARED FOR: MADAM SITI HAJAR YUSOF

TABLE OF CONTENT BIL

CONTENT

PAGE

1

Acknowledgement

1

2.

Biodata of the family

2-3

3.

Financial Information

5-6

4.

Monthly Expenses

5.

Balance Sheet Statement

8 - 10

6.

Cash Flow Statement

11 - 12

7.

Ratios

13 - 14

8.

Income Tax Year Assessment 2019

9.

Comment and Advice

7

15 16 - 19

ACKNOWLEDGEMENT By the name of Allah, the Most Gracious and Most Merciful. There do I worship and then aid I seek. Show to the straight way, the way of those have bestowed the grace, not those who are wrath and astray. Thanks, because I am able to finish this individual assignment. A lot of efforts have been done and surely there are various parties involved in contributing information to me. I would like to express my sincere gratitude to all of them because without them, I am not able to complete this assignment. First and foremost, I would like to thanks to Madam Siti Hajar, who introduced me to the Personal Financial Planning (FIN 533) subject. And giving me a good guideline for advice, guidance, encouragement for this assignment. I also thank the Universiti Teknologi Mara (UiTM) for consent to include copyrighted pictures as a part of my paper. In addition, I would also like to acknowledge with much appreciation to En. Ku Azmi and family, who gave me permission to use all required information that related to the financial planning to complete the task that required for my individual assignment as the completion of this assignment gave me much pleasure. As well to my family, thank you for their love and support. Many people, especially my classmates have made valuable comment suggestions on my paper which gave me an inspiration to improve the quality of the assignment. This actually has been a constant strength a lot because during the complementation of this assignment in giving opinions and ideas. Thank you.

1

BIODATA OF THE FAMILY

En. Ku Azmi bin Ku Abdullah is currently working in a private company which is Indah Water Konsortium as Planning Engineer for 25 years. He is 51 years old. He is a husband and a father of five children. He is happily married to Puan Masni binti Sulaiman who is a fulltime housewife. Therefore, En. Ku Azmi sole breadwinner and earns RM 9,700 per month. He also pays EPF and Income Tax from his gross salary. En. Ku Azmi and Puan Masni have been married for almost 27 years and blessed with four sons and one daughter who are currently already working and studying. In further state, his first child is Ku Mohd Faiz, 26 years old who is currently working as a Wireman Electrician at one of the merchandising companies. Then En. Ku Azmi’s second child is Ku Miza Syakirah, 23 years old who is currently doing her degree major in Economic at Universiti Teknologi Mara (UiTM). Next, his third child, Ku Muhd Sufi, 19 years old, who is currently doing his diploma in automotive at Kolej Poly-Tech Mara (PERDA). While his fourth and fifth child, Ku Muhd Solihin and Ku Muhd Syamil, 17 years old and 13 years old respectively are still in secondary school at SMK Guar Perahu. The whole family lives at Seberang Jaya, Pulau Pinang and has been living in a Duplex house with his wife and children, except for their first son Ku Mohd Faiz which is he stay at his rented 2

house and also their daughter, Ku Miza Syakirah which is she stay at college and just be at home during weekend only. They stay at that house for almost 18 years after En Ku Azmi bought it for his family. Furthermore, En. Ku Azmi owns Xpander Mitsubishi as a family car, and Perodua Myvi used for daily use. En. Ku Azmi’s wife has a driving license in which where his wife will go around with that Perodua Myvi to pick their sons from school and supermarket. He also owns the Honda Wave Dash motorcycle year 2015 that he used for work and go to mosque or futsal. Besides that, he also bought other two motorcycle for the uses of his sons, which Yamaha LC year 2012 and Yamaha Lagenda year 2016. Moreover, En. Ku Azmi owns a One Storey house and a flat a long time ago that used to be his investment in which give rent to the rental. In the conclusion, En. Ku Azmi and families are actually my own family. And he himself is a very kind-hearted person and really taking care of his family. Being able to be my own father’s financial planner is a huge chance for me.

3

FAMILY CHART OF EN KU AZMI’S FAMILY

En. Ku Azmi bin Ku Abdullah Pn. Masni binti Sulaiman

Ku Mohd Faiz, 26 years old

Ku Miza Syakirah, 22 years old

Ku Muhd Sufi, 19 years old Ku Muhd Solihin, 17 years old Ku Muhd Syamil, 13 years old 4

FINANCIAL INFORMATION DETAILS

RM

Monthly Salary

9,700

Cash on Hand

750

Saving Account Balance

5,760

Bonus

1 months’ salary

Rental Income of One Storey House per month

1,200

Rental Income of Flat House

500

Market Value of Xpander Mitsubishi

91, 369

Market Value of Duplex House

500, 000

Market Value of Perodua Myvi

45, 300

Market Value of Honda Wave Dash

5, 860

Market Value of Yamaha Lc

5, 480

Market Value of Yamaha Lagenda

5, 683

Household Furniture (current value)

10,000

Laptop (current value)

3,000

Clothing (current value)

7,000

Xpander Mitsubishi loan balance

85, 654

Duplex House loan balance

367,500

Credit Card

2, 500

Outstanding Telephone bill

120

One Storey House (market value)

275, 000

Flat house (market value )

98, 000

Purchasing Smartphone on January 2019

1,160

Monthly Installment on Duplex House

1,838

Monthly Installment on Xpander Mitsubishi

786

Electricity and water bill per month

370

5

Vacation

1, 800

Parents allowance monthly

500

Food and household supplies

700

Dining out

300

Transportation - fuel, parking and toll per month

500

Car Insurance and Road Tax

2, 530

Clothing Expenses

1, 000

EPF Monthly Contributions

1, 067

Income tax per month

291

Annual Zakat

1,500

School Children Expenses for 4th and 5th child per month

600

University Fees a year for 2nd and 3rd

1,860

2nd and 3rd expenses per month

680

Children Pocket Money

250

Textbooks expenses

500

Saving at Tabung Haji

7, 460

Car maintenance

470

Medical Insurance for Spouse and children

213

Life Insurance Personal

157

Donation to Rumah Kasih Abadi

300

6

MONTHLY EXPENSES

7

BALANCE SHEET STATEMENT

8

Based on the balance sheet as at 31 December 2020, En Ku Azmi and family have the amount of total assets is RM 1 054 822 which is really high actually. The liquid assets are on saving accounts and cash on hand is RM 6510 in total. Then, the lifestyle assets En. Ku Azmi’s have own 2 cars which is Mitsubishi Xpander, still has loan outstanding and Perodua Myvi fully owns by his family because fully paid to the bank last year ago. Usually, En Ku Azmi and family always used Perodua Myvi as a daily used car rather than Mitsubishi Xpander as family car for them, which will only be used due to emergency or any occasion or vacation and other important occasion that must be attend by whole family. During 2014, En, Ku Azmi has bought a duplex house that located at Penang for his family that they are living there until now with the market value RM 500,000 from RM 300,000 of purchase price. It is a good asset that has a high value in the future. Also, it owns the motorcycle year of 2012, 2015 and 2016 which sometimes used for work and mosque and he bought those motorcycle for the use of his sons as well. The laptop are very important that used by his daughter for study purpose and also for En. Ku Azmi as well when he has to work from home. Then, due to En. Ku Azmi’s wife like buying house stuff their household furniture current value is RM 10, 000. En. Ku Azmi’s family has five children whose love reading and four of them are still studying and it current value is RM 500 and clothing at RM 7, 000. That year suddenly his son phone broken cannot function well and En. Ku Azmi decided to purchase new smartphone at RM 1, 160. Besides that, the investment assets of En. Ku Azmi family own an one storey house and also a flat house which located at Kulim, Kedah and Penang as well that used as a side income for them. He bought that flat house a long time ago, right after he got married to Pn. Masni and the one storey house were belonged to Pn Masni, she bought is also after she got married and on that time she was an accountant, so she has her own income by that time. But right after she giving birth to her second child, which is their daughter the decide to quit from her job and they move to the duplex house. Other than that, En. Ku Azmi’s family has a saving at Tabung Haji as their backup money for the future used in case an emergency incurred. The current liabilities are only on credit card and Telephone bill outstanding at the amount RM 2620 in total. The non current liabilities of En. Ku Azmi family is Mitsubishi Xpander and mortgage house loan balance. En. Ku Azmi’s family has got a mortgaged house and their balance on the mortgage is RM 367,500. They purchased that house about 18 years ago

9

by paid the deposit of 25 %. Also, the car loan balance is RM 85 654. They purchased in the year of 2019 by paid the 15 % down payment. The following shows the details of the balance of the loan :-

Duplex House (RM)

Mitsubishi Xpander (RM)

Purchased Price

300 000

113 669

Down Payment

75 000

19 188

Loan Balance

250 000

100 000

Interest Rate

4%

3.5 %

Tenure/months

30 years / 384 months

10 years / 120 months

Total loan

661 680

94 320

Annual Installment

22 056

9432

Outstanding Tenure

14 years

9 years

Outstanding balance

367 500

85 654

10

CASH FLOW STATEMENT

11

Basically, the main income of En Ku Azmi and family is totally depending on the salary of 79.45 % in which RM 116 400 annually and RM 9700 per month. In addition, En Ku Azmi is the sole breadwinner and earns RM 9700 per month and bonus of one months’ salary, 6.62 %. Therefore, the side income of the family is coming via the rental income of their two house which are a single storey house and a flat house which contribute 13.92 % to this family total income. In which En Ku Azmi will receive RM 1700 per month from his two tenants.

12

RATIOS Asset Liquidity I.

Liquid asset to take home pay ratio

= Liquid assets / Take home pay = RM 6510/ RM ( 116400 - 3492 - 12804 ) = 6.5 % @ 0.78 months

En Ku Azmi family’s was not at safe side because their liquid asset to take home pay ratio are less than 25% which just 6.5%. So, their liquidity are not maintained. II. Current Ratio

= Liquid assets / current liabilities = RM 6510 / RM 2620 = 2.48 times

Current ratio is at 2.48 times. This shows that En Ku Azmi has high liquidity position. Higher ratio is better. And if more than 1 that means the family could maintain their liquidity

Level of Debt I.

Debt Ratio

= Total Liabilities / Total Assets = RM 455774 / RM 1054822 = 0.43 @ 43.21%

En Ku Azmi debt ratio is at 43.21% which quite high and almost 50% , he may face difficulties in putting new loan in the future. En Ku Azmi was in private sector and his debt ratio should less than 30% to has good debt ratio.

13

II. Debt Service Coverage Ratio

= Take home pay / Total Installment = RM 100104 / RM 31488 = 3.18 times

En Ku Azmi earns RM 3.18 in take home pay for each RM 1, he needs to pay for his loan payment. And higher ratios was better.

Take home pay ratio

6.5 % @ 0.78 month

Current ratio

2.48 times

Debt Ratio

43.21 %

Debt Service Coverage Ratio

3.18 times

14

INCOME TAX YAR ASSESSMENT 2020

15

COMMENT AND ADvISES According to the balance sheet, its good for En Ku Azmi’s family because the family has a contribution to saving where the assets are much larger to cover all of their liabilities, in which their total assets shows RM 1 054 822 and surely their total liabilities are less than that which just RM 455 774. So, for me its was not a big deal for En Ku Azmi to settle all of his current debt like what shown on the percentage of ratio before. In future later also, En Ku Azmi can still pay of all his long term debt if he invest more in future to gain more income. Like now, he already have two house that he give rent. So currently the rental income are the other sources of income rather than his salary. So in the future he might invest more regarding this, maybe bought another house and give rent or invest in business maybe a business and let his wfie Pn Masni who is a housewife to handle it considering all of their children are big enough. Through this investment he not just could gain more income but he already increase his assets. Therefore, the net worth is RM 599 048, his net worth can prove true measurement of his wealth and its actually was a good starting point when constructing a financial plan. In current liabilities, En Ku Azmi has a credit card amount of RM 2 500. Generally, it knows that credit card can be one of major debt traps but En Ku Azmi could manage it well. The purpose in the future En Ku Azmi just have to assure that he could manage his money wisely in which much contribute in his saving and much important investment. Invest more to gain more income. Next, after going through to this family cash flow statement, En Ku Azmi and family are used to contribute in saving. Why ? Because the total income is bigger than the total expenses in which their saving shows the amount of RM 146 500. Thus, En Ku Azmi not only earns on income but every, En Ku Azmi are able to get one month bonus of his salary and same goes to the rental income from two of his tenant that rent his single storey house and flat house. Currently, it shows positive cash flow even though their expenses are quite high actually. He spends more on car expenses considering he owns two cars which both of this car need to pay for the insurance, road tax and transportation cost every year. In addition, En Ku Azmi’s children are still studying and this eventually makes him spend more on his children expenses same goes to their fee such as university fee, their pocket money, textbook expenses and so on that related to it. Moreover, En Ku Azmi also have non-current liabilities which take another 14 years to go to settle his debt, one of the way that can help En Ku Azmi to pay it off faster is by adding him 16

extra money back. But how? First, he could increase the rental payment and he also could cut off some of his children pocket money. By that so, it could least En Ku Azmi outflows and its could help to boosts this family emergency fund or grow the retirement savings. Insurance planning is one of the parts and parcel of today’s life. This means that it is so important to plan an insurance for yourself as well as your family. As En Ku Azmi build his wealth, its has been his responsibility for him to protect it. He has to protect his assets against any unforeseen events while not as a direct a way of saving as investing. Insurance planning can save the significant amounts of money over the long term and its good for this family future actually. Can we can predict whats going to happen for this coming 10 to 20 years, with the condition of the world economic and so on. Currently, the insurance planning has been carried by En Ku Azmi and family are the medical insurance for wife and children and life insurance for himself. The protection plans En Ku Azmi has taken for his family are just a medical card for his wife and 5 children. Thus, En Ku Azmi paid RM 4 440 annually total for both insurance and that is not a huge amount for him to pay because he could cover the monthly payment. Moreover, En Ku Azmi got deduction in the tax relief for those medical insurance. And considering he has another 2 sons who still studying, it is good for him to get a premier education savers under Maybank Malaysia In which an investment- linked lifetime plan with a mix of coverage and strategic investment for his children education. The lifetime investment option upon reaching 25 years of age, his children could choose to take over the policy ownership and continue saving in which the plan expires at age 100. Through this effort, En Ku Azmi could prepared such a good assets for his children that they could use in the future. According to the inflows and outflows, En Ku Azmi is able to pay for the minimum premium plan which costs RM 100 per month. And for his both sons, it just costs RM 200 per month . Besides that, if En Ku Azmi are much prefer education planning , he could invest in SSPN, there is also beneficial to his children. And maybe in future he could get the education insurance for his children cause 4 of his are still studying and this could be good for then especially for his 2 sons that still at school, this could help them to pursue their study later on. Investment planning is a crucial part of gaining more income. Besides savings, En Ku Azmi should invest his money to get returns for future use. Thus, an increase in cash flow can lead to an increase in capital. It can allow En Ku Azmi to consider investments to improve his

17

overall financial well-being. Referring to the balance sheet, En Ku Azmi’s investment asset is the single storey house and flat house also his savings at Tabung Haji. The single storey house was fully owned by Pn Masni and flat house was fully owned by En Ku Azmi for almost 5 years after settling all the settlements at the bank. The investment assets on the houses that he gave for rent make him gain more profits because the purchase price is RM50,000 for flat house and RM198 000 for single storey house but for now the market value of flat house is RM 98 000 and single storey house has reach RM 275 000. Also, throughout the year En Ku Azmi and family have savings on the Tabung Haji account balance at RM 7 460. In a total of investment assets amounting RM 380 460. He still can add his investment before he retires. Currently, En Ku Azmi is already at the age of 51 years old an...