Case 1

Miss Kerry is working with TESCOs Horsham, West Sussex. She is on a day shift and works
additional shifts on weekends to meet her routine expenses. She has moved from her parents
house recently, post her graduation in Retail Management. She works in the operations side in
this TESCO mall. She has a brother who is married and well settled in London. He is a finance
analyst. Her friends, Jane, Janice and John form her circle of friends. She has no addiction and is
healthy. She is registered for the NHS schemes of the UK government, which takes care of the
future health issues, if any. She is a social drinker and does not have too many late nights. Her
immediate superior, Mr. William, is a professional and a dedicated worker at TESCO. He is very
caring and supportive as well. On one occasion, Ms. Rachel, who was working with TESCOs
since last 30 years was to retire in a couple of days and the employees has planned a farewell for
her. Kerry was given the task to arrange the food for the farewell party. With conversing with
Rachel during the lunch break, Kerry found that Rachel was subdued and looked sad. On
inquiring whether her Rachel had a down mood due to her impending retirement, Kerry was
shocked to hear that Rachel was sad, as she did not have a retirement corpus or plan in place and
her retirement was going to hit her bad financially, especially in line of her pending house loans,
her kids college education and her recent divorce which had taken a big hit on her savings. She
mentioned to take up a job elsewhere as TESCOs did not allow her to continue on an hourly or
part time basis as well. Further, she mentioned to Kerry, that, had she planned her retirement and
finances more effectively, she would not have been in such a position as of now. Hearing her side
of the story Kerry has a spike in her spine and anxiety entered her thoughts. Even though she was
just 20 years old, she had never thought of any financial goals and plans including retirement
plans. Kerry was surprised that she at her young age, was a deterrent to all such ideas, on money
management as even though had a decent income and carefree of what was to come in the future.
However, after discussing the same with her friends, they all realized that they needed a much
better financial plan. Among the various ideas, Kerry decided to work on her retirement goal as
savings started from a very young age would add to a better corpus due to the added advantage
of compounding. Kerry approaches you, the financial planner as a client. She decides to put an
equal amount of funds aside every year for the next twenty years. Considering the future cost of
living, she wants to withdraw fifty thousand pounds per year for twenty years once she retires at
age sixty. Her first withdrawal to be on her sixty first birthday. Suggest how much amount she
should keep aside each year for her retirement if these savings and investments earn her a ten
percent return on her funds based on her risk aversion index. Ignore taxes and inflation.
What would be your answer in the following other situations:
a) She is thirty years old now and will invest till age 40 only.
b) She expects a conservative return of nine percent considering the uncertainty of
the future in lieu of twelve percent as envisaged by the financial planner.
c) She has an Aunt Ms. Kim, who is 40 years old and plans to retire at sixty but is a
risk taker and expects a fourteen percent return due to higher equity exposure in her
 investments. Calculate her Corpus at age 40, assuming Kerry financial data being the
same as applicable to her.

Case 2:
Kitty is employed with Dhoka Bank. She is single, aged twenty seven and marriage is not on the
cards at present. She has completed her Masters in Finance and had joined the bank a few years
back. Her job profile consists of Customer facing roles and Client acquisition for investment and
retirement plans. She was a high achiever and with her pleasing personality, aptitude, good
enunciation skills and convincing power, she has been in the top three target achievers for the
Bank for the last three years. She is highly motivated and enjoys her work very much. Due to her
good performance she has been posted to Dubai as a Senior Business Development Officer. As a
part of her new job profile, she was to develop and manage the High Net worth Individuals
(HNI) wealth. Wealth Management was her niche domain in her job profile and she was to
acquire and manage new HNI clients.
One of her new clients was Ms. Belle from Norway who was employed as a Marketing CEO at
Dubba Dubba Water Sports Private Limited, a pioneering company in Water sports in Dubai. She
had an annual income of Dirhams (DH). 300,000. This income was to grow at five percent every
year. Ms. Belle`s living costs in Dubai consisted of rent payments, utility bills, routine food and
maintenance expenses and local conveyance. Her total current level of expenses came to 180,000
DH. She did not have any loans or any other annuity of liabilities. Kitty was to prepare a retire
portfolio for Belle. On gathering information from Belle, Kitty estimates that Belle meet her post
retirement expenses equal to seventy percent of her pre-retirement expenses. However, Kitty who
had come across a report on inflation in Dubai, wanted to adjust the plan for inflation which is
six percent. She plans to maintain a diversified portfolio for Belle with a higher exposure to
equity considering the volatile Dubai Financial Markets with an aim to generate a ten percent
return on Belles portfolio. Belle wants to know her retirement corpus, if she wishes to retire at
age sixty and hopes to live for another twenty years after that, she is twenty seven at present.
Assume withdrawals are done at end of year.
Additional Questions:
(1)What would be your answer in case Belle is 37 years old with an investment return
expectation of thirteen percent? Assume withdrawals are done at end of year.
(2) What would be your answer in case she is?
a) Aged 35 b) Aged 36 c) Aged 45 other things remaining the same as in original
data
d) Would your original answer change is the Inflation is estimated at 8% other things remaining
the same
e) Would your original answer change is the Inflation is estimated at 4% other things remaining
the same
f) Would your original answer change is the post-retirement expenses are estimated at 80% of the
pre-retirement expenses other things remaining the same
g) Would your original answer change is the post-retirement expenses are estimated at 90% of
the pre-retirement expenses other things remaining the same
h) Suggest a list of asset allocation for her assuming average return based on the rates of return
obtained in the current financial year 2015-16