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Personal Financial Planning Models

This part of the report describes the personal financing model which describes procedure that how an individual should plan about his goals and financial matters. This is a four step model which starts form assessing the current and potential future situation and ends on review the outcomes. The financial planning models are described in the practical way in the next couple of examples in which, a young couple and a lone parent is described in the models.  

 

YOUNG COUPLE EXAMPLE:

 

It is assumed that a young couple is newly married, it now is planning for a short trip to abroad, after that it has a plan to make a home of its own and gather some money for other up coming incidents.

 

Assessing the current situation:

 

In the start of the example couple has decided it goals/future plans. It has enough money to have a short trip in abroad but it doesn’t have enough money to buy a home in the future. It can just pay the quarter of the payment of a sort of home it is willing to buy. The couple research the market to have information about the different product can help it in the future.

 

Decide on a financial plan:

 

After research on market the couple has decided to have a good short trip to abroad with the available amount and then to have a home on lease form a House Building company which has a lower interest rate than market for 10 years. Half of their income would go for the lease installments and with rest of income they will run the home affairs. They also have decided to save 5% of their income and fix it in the saving account of a bank which pays the highest interest rate and also allow them to withdraw the amount when they need. This saving income would be helpful for any future incidents when the couple need money.

 

Act on the financial plan:

 

Finally, the couple implemented on its plan when it bought a lease home from Housing Corporation, which has one of the easiest installment plans with marginally lower interest rates. They also had a good short abroad trip for honeymoon. They also open a savings account with Barclays bank, which was providing a good income on their fixed deposits and allow withdrawing the whole amount when needed. 

 

All of sudden when the financial cries of 2008 come Housing Corporation closed the couple changes their lease form The Housing Finance Corporation which was providing even lower rates of interest. In this way they benefited but crises lowered the couple income because of which had to forfeit the saving plan and withdrew the amount with interest. 

 

 

Review the outcome

 

The couple will always have to review their plan according to their on going and changing situation with the passage of time. Even when it completes the house lease then it will have to make newer plans to pass their remaining lives. Social and economic situations are always changing which can change effect their plans in the negative ways. So, the couple will also have to keep a look on the changing situation.

 

ALONE PARENT EXAMPLE:

 

Alone parent had a good amount of money when he retired. His goal is to pass the rest of the life without doing a lot of work. Therefore, he decided to invest his money in the stock exchange. Then he invests according to plan in the different companies like Vodafone, Lulu stores and o2. All of sudden it was a slump in the stock market. He suffered form some losses and then by reviewing, he invested his whole amount the fixed deposit in the Royal Bank of Scotland and decided to pass the life on the interest income form the bank .   

 

 

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The above two graphs describes the different 12 different areas of England’s residential property rates from 1983 to 2007. We can see that all the property rates are having almost the similar sort of fluctuation which upward rise. We nowhere can see that any of the curves in the graph has gone downward. By watching all this we easily can say that whoever had invested in this era would have earned a lot of profits in the residential real estate sector in any part of England. The most up rising curve in the first graph is of E. Midlands which have been raised in the rising speed. It shows a fast rise in the start and then it has a massive rise which gives a steep sloop image. The second highest curve is of North England which almost has the same up rise as the E. Midland but it is a bit lower than the previous.

 

 South West England has almost the same tendency of rising up as the previously discussed two of the curves has. Rest of the areas including; YORKS/HUMB, W. MIDLANDS, E. ANGLIA, SOUTH WEST, and SOUTH EAST have a great similarity amongst them. All of these graphs, rise up form 1987 to 1992 and then rise very slowly form 1992 to 1997. After this rise, they raise high form 1997 to 2002 and in the last part form 2002 to 2007 all of these five graphs line raise extremely means the last era was the most profit making era in these areas.

 

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