Case study of Maureen Dilemma Question 2: case study of Tom Ponders Managed Funds Document Preview: Case Study 2: Maureen’s Dilemma In 2007, Maureen Carter, a retired 64-year-old, divorced her husband...

TOM PONDERS MANAGED FUNDS
Req: 1
What types of managed fund investments would you set for Tom? Include in your answer some discussion regarding types of funds you would consider, the investment objectives you would set, and any investment services (eg, withdrawal plans) you would seek. Explain.
Ans:-
As discussed in the case, TOM has planned to invest for a longer period of $ 10,000 lumsum initially and want to deposit $ 150 at the end of each quarter till the time he reaches to superannuation. The primary objective of his plan is to save a sufficient funds for his life after retirement to meet his family needs and to get rid off from wo
ies for his children without looking forward for any support from any agency.
After hearing his financial information and future plans and objectives, we discussed different investment options existing in investment market with Mr. Tom. We discussed the following fund investment opportunities:-
1. Capital protected managed fund
2. Childs education saving fund.
3. Geared investment managed fund.
4. Ethical investment managed fund
5. Hedged managed fund.
6. Indexed managed fund.
7. Managed investment account fund.
8. Property trust managed fund
9. Investment bonds managed fund
As the requirement of Mr. TOM was to meet the financial needs after retirement of his dependants and to cover his children education, so Child’s education savaing fund was explained and shared in detail.
Child’s Education Saving Fund
This fund is designed and managed to provide opportunity to low and middle income group people to save for the future requirement of their children education. The Govt provide incentives for longer investment in Child Education Saving opportunities in the form of tax rebates. So investment in this fund will be tax effective for TOM.
Tax Incentives
Any investment made in Child’s Education Saving fund and earning from this fund is not reportable in the investor annual tax return. So the earning from this funds remain in the accounts of the investors and grows gradually.
Further that investors can withdraw money from this funds at any time, however, as discussed this fund is basically to meet the educational expenses of the children under care, investors will have to pay penalty tax for utilization of money for other than educational expenses.
Who can invest in Child Saving Education Fund
Any person having age more than 16 years can investment in the Child education saving fund at any time for the education of their children. The investors of this fund can be parents, grandfather, grandmother, uncle aunts.
Method of Investment
Investors can invest in this fund either in lumpsum or a regular monthly or quarterly instalment. Any change in original plan can be made without any penalty or fee. The maximum limits of this plan per child is $ 3,65,000 per child. This limit is reviewed annually according to rises in cost of child education expenses.
Capital Protected Management Fund
The next investment proposal suitable for TOM is investment in capital protected managed fund. This fund guarantee for payment of 100% initial investment inspite of that fund performance remained poor. So the investment in this fund is considered as risk free investment. Suppose, if an investor has deposited $ 10,000 initially, he will receive atleast$10,000 at the time of expiry of term even if the fund performs very poorly and suffer losses. Investor will not bear any loss of his capital investment.
It is important to note that protection varies from proposal to proposal keeping in view the amount of investment. It is therefore necessary that investor should...