· Thirdly, you can manage your cash flow by increasing your assets and reducing your liabilities.

Having more assets is very important since it raises your net worth. You can purchase more assets such as properties and land. You can manage your debts such as reduce your appetite for loans and raise your allocations for liabilities settlement. This way you will be freeing up more cash which can be investments for future benefits. Your

Graph 1: A comparison of your current and expected assets and liabilities

I have reviewed your cash flow management for the next 12 months with a few changes in your lifestyle. Putting all aspects into consideration, the first option is the most effective cash flow management plan for you. After accounting all income and expenses adjustment, your annual surplus has been increased from $27,785 to $49,045. I have accounted for the under-utilization of your working assets. I have also accounted for the increase in insurance premium of $9,200 which is payable for the extra insurances. This does not mean that this entire additional insurance premium will be assumed as expenses. A significant amount of it forms an investment figure in your insurance policies that you will benefit from in future since it forms a component of your venture portfolio.

Table: Summary of Cash flow management Option

Graph1: A graph showing Current and expected cash inflow and outflow and the surplus

2) Assets optimization

Your current worth which is the difference between your assets and liabilities is $268,694. The current asset portfolio generates back 39% which is good but is an underutilization of your assets given your moderate risk appetite. You have two houses that are unoccupied and which you barely use. If rented out, they can add $9,600 to your annual income.

Table: Current and expected asset allocation

From the data you provided, I have realized that your rental houses have had an average occupancy rate of 65% which is an underutilization of the investment. I advise you invest some few money on advertisement to market it to the public. You can also consider lowering the rent from the current $200 per month to $180 per month to attract more customers. At a 90% occupancy rate, the rental flat can inject an additional $6,000 into your annual income.

I recommend you utilize the extra personal car that is wearing out in your garage into a taxi which can generate $2,815 per year. You have an extra personal car that is wearing out in your garage. A 2000cc Nissan Altima has a resale price of $4,200 in the current market, and the proceeds can be in a more beneficial investment like bonds or stocks which at a 5% return rate you can generate $210 annually. You can also convert it into a taxi which can generate $2,815 per year.

Table: Income from Working Assets

After restructuring your working assets, I have increased generated from working assets by $18,235 which is an increase of 52% from your current earnings. Your return rate will be increased by 5 % which is in line with your desired 4% annual growth rate.

Graph: Current and expected working assets income

2.1) Asset allocation profile

Your asset allocation profile portrays an aggressive approach which in your investment. 95% of your investment is on long-term investment which is an indication that you aim to maximize risk while minimizing risk. Such a profile has rocketing volatility rate and exposes you to a very high potential for growth, but the income is usually meager which is evident in your assets returns (Tibergien & Pomering, 2005).

Table: Asset Allocation

Chart: Asset allocation profile

You have allocated 61% to buildings, 34% to life insurance, 4% to cash and 1% to motor vehicles. Strategic asset allocation will maximize your assets returns. You can set fixed percentages of assets allocations to avoid having too much of long-term assets or too much of short-term assets which will also assist in balancing your risk on your investments. Your assets will grow. The chart below shows your expected future asset allocation as per your expected growth. This is a more distributed asset allocation compared to your current asset allocation. The property has 62%, cash and cash equivalents have 16%, cash value insurance has 14%, and motor vehicles have 8%.

Chart: Strategic asset allocation

3) Insurance planning

You have invested heavily in your retirement plan and under-insured yourself and your family. Personal and family medical insurance is very important for they reduce chances of spending much of your cash and cash equivalents settling hospital bills. Other time you might be forced to convert your assets into cash to pay medical bills which reduce your total assets and hence lowering your growth rate. I recommend you increase to purchase a personal and family medical policy. A good personal cover will cost you about 1,000 dollars annually and $2,500 for your family cover which will cover your wife and your two children.

Table: Insurance Policy Allocation

59% of your risk management allocation goes to life insurances, and 40% goes to ensuring your property. Your motor insurance is third party insurance which means in case of an accident; you don't get compensated.

Chart: Risk management allocation

Accidents are inevitable and unpredictable hence I recommend you purchase a comprehensive first party motor insurance that will cost you $600 annually for both cars. You also undervalued your property when purchasing your property insurance which means when a loss occurs today you will only get compensated for the value in the policy and not the actual value of the asset which will be less (Ramsey, 2013). I advise you to upgrade your property insurance to $10,000 to match your current value of asset since you undervalued your assets at the time of purchase of the policy.

Table: Summary of your current and expected risk management

4) Retirement plan

4.1) Find the retirement lump sum

Your goal is to achieve an annual financial growth of 4% that translates to a monthly income after-tax of $5,905 until the last day of your life expectancy of 85 years which is equal to your current expenses. This translates to $70,860 annually which will be required perpetually. Putting inflation into consideration, we calculate the lump sum that you will require for your retirement. You will be retiring in the next 17 years, and the adjusted inflation rate will be 1.4%. The post-retirement fixed return rate is fixed at 2.5%.

4.2) Funding the entire lump sum

All your sources of income will fund the accumulation period for this desired lump sum.

The value of motor vehicles is not included in the revised assets because they depreciate with time and lose value and hence you will be making a loss. You are only able to raise $2,413,075 of the $6,441,818 creating a deficit $4,028,743. The options are

· Increasing your rate of return on your venture portfolio from 6% to 27% to cover the deficit. This will give $4,090,838 which is equal to the cash deficit from your retirement lump sum. However, leveraging your investment at such a rate can produce desired returns but it is very risky, and I would not recommend it.

· You can delay your retirement to 70 years which will add some income to your retirement fund, but it will not meet your entire lump sum fund.

· Scale down your retirement lump sum to $141,946 annually which will cover the entire $2,413,075.

I recommend scaling down your retirement lump sum.

CONCLUSION

All recommendations in this report are arrived from a comprehensive analysis of your current situation according to the data provided. While I have made every effort to provide you with the best plan to ensure successful financial success, commitment and discipline is key to the success of this plan. If you commit to the recommended plan with dedication, you are likely to achieve your future goals.

References

Brinson, G. P., Singer, B. D. & Beebower. G. L. (1991). Determinant of Portfolio Performance II: An Update. Financial Analyst Journal. Charlottesville, VA.

Kahn, M. Y. & Jain, P. K. (2005). Basic Financial management. Tata McGraw-Hill Education.

Ramsey, D. (2013). The Total Money Makeover: A Proven Plan for Financial Fitness. Classic Edition

Tibergien, M. C. & Pomering, R. (2005). Practice Made Perfect: The Discipline of Business Management For

CURRENT AND EXPECTED WORKING ASSET INCOME

Current Income from offices Rental Flats income Rental car Total 18840 16400 0 35240 Expected Income from offices Rental Flats income Rental car Total 28260 22400 2815 53475

Type of Income

Value in $

ASSETS ALLOCATION PROFILE

Value property Motor vehicles Cash value Insurance Cash and cash equivalents 510500 7000 290000 35694

STRATEGIC ASSET ALLOCATION

Value property Motor vehicles Cash value Insurance Cash and cash equivalents 647100 85400 141100 161139

RISK MANAGEMENT ALLOCATION

Amount Life insurance Personal and family insurance Property insurance Motor insurance 110000 1250 74750 250

YOUR ASSETS AND LIABILITIES

Total Assets Old Expected 843194 1034639 Total Liabilities Old Expected 574500 464500

EXPECTED INCOME CASH FLOW

Amount Expected surplus from first option Expected surplus from second option Expected surplus from third otpion 49045 59030 76470

· Thirdly, you can manage your cash flow by increasing your assets and reducing your liabilities.

Having more assets is very important since it raises your net worth. You can purchase more assets such as properties and land. You can manage your debts such as reduce your appetite for loans and raise your allocations for liabilities settlement. This way you will be freeing up more cash which can be investments for future benefits. Your

Graph 1: A comparison of your current and expected assets and liabilities

I have reviewed your cash flow management for the next 12 months with a few changes in your lifestyle. Putting all aspects into consideration, the first option is the most effective cash flow management plan for you. After accounting all income and expenses adjustment, your annual surplus has been increased from $27,785 to $49,045. I have accounted for the under-utilization of your working assets. I have also accounted for the increase in insurance premium of $9,200 which is payable for the extra insurances. This does not mean that this entire additional insurance premium will be assumed as expenses. A significant amount of it forms an investment figure in your insurance policies that you will benefit from in future since it forms a component of your venture portfolio.

Table: Summary of Cash flow management Option

Graph1: A graph showing Current and expected cash inflow and outflow and the surplus

2) Assets optimization

Your current worth which is the difference between your assets and liabilities is $268,694. The current asset portfolio generates back 39% which is good but is an underutilization of your assets given your moderate risk appetite. You have two houses that are unoccupied and which you barely use. If rented out, they can add $9,600 to your annual income.

Table: Current and expected asset allocation

Details	Current	Expected	Percentage increase
Total fixed Assets	$843,194	$1,034,639	23%
Working Assets	$547,103	$571,003	4%
Income from working assets	$35,240	$ Related Tags Academic APA Assignment Business Capstone College Conclusion Course Day Discussion Double Spaced Essay English Finance General Graduate History Information Justify Literature Management Market Masters Math Minimum MLA Nursing Organizational Outline Pages Paper Presentation Questions Questionnaire Reference Response Response School Subject Slides Sources Student Support Times New Roman Title Topics Word Write Writing