Balanced investment choice

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Component Two (30 Marks) Due May5th 9.00am 

Mathew and Bettina Watson have come to you for advice about their Superannuation

Mathew is 38 and works for a road construction company. He has an accumulation fund account with an Industry based fund. As part of the Enterprise Bargaining Agreement at his work his employer pays an amount equal to 12 % of his salary into superannuation. When he joined the fund he was automatically placed into the default investment choice, which is a balanced investment choice. Mathew has remained in the balanced investment choice because he has never taken time to work out what is the best investment selection for him

In the past year Mathew’s fund has produced a positive nominal return of 8% before fees and taxes.

In 2014 Mathew earned $73,400. He has a balance in his Superannuation account as at 31st December 2013 of $268,420. Mathew salary sacrifices $5000 per annum of his salary into Superannuation.

Bettina is 43 years old. She is an editor with a publishing company and works 2.5 days per week and does not want to increase her working time as she has ongoing charity work which she is keen to continue. Bettina is in an accumulation scheme. With a retail fund and her employer contributes the standard superannuation guarantee into her account. Bettina is also in a balanced investment choice which produced a return of 11% before fees and charges..

In 2013 Bettina earned $39,400. She has a balance in her Superannuation account as at 31 st December 2013 of $247,612. She does not salary sacrifice

Both Mathew and Bettina intend to keep working until Mathew reaches his preservation age.

They have $140,000 in investments assets outside of Superannuation. It consists of a Holiday home (purchased for $70,000 in 1995) They have a mortgage on their home of $95,000 and have 10 years to go with a current rate of interest at 6.75% pa. They have one child who is independent. They currently generate a surplus of $10,000 per year (the current expenditure included the current P & I loan repayments of $13,863 pa). Their great passion is dinning out. They estimate that they would spend approximately $30,000 pa on restaurants meals and entertainment.


Type: Essay || Words: 1457 Rating || Excellent

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