Response to the following problem:
Jack and Jill Hawkins have recently got married. In planning their future, they have decided to solicit the services of a financial advisor (you) with the aim of implementing their short and long term lifestyle goals and financial plans. Jack and Jill are both aged 28.
For their immediate future they have decided that they want to purchase a new house and a new car. The house they are looking for has a value of Rs 4,000,000 and they are very excited as both of them have never owned a home before.
The purchase of the house will be through bank loans. A 25% down payment will be required.
They would also like to buy a new car for Rs 1,200,000. However, they are unsure when to buy the car.
Their longer term plans involve establishing a fairly aggressive investment portfolio with the aim of directly purchasing an investment property and investing in a share portfolio amongst other strategies that you may recommend. They have also heard from a friend that interest rates are currently low and they could borrow to achieve their goals.
Jack works as a consultant in the private sector and earns Rs 600,000 gross income annually, while Jill works for a school and earns Rs 325,000 gross income annually. They also enjoy taking holidays and plan to have a holiday each year to the value of Rs 10,000 with a tour of Europe trip planned in five years time to the value of Rs 370,000. Jack and Jill are also keen to retire early and are quite willing to take on additional risk if this assists in them achieving their lifestyle goals faster. They have managed to save between them Rs 500,000 in cash and deposits and are looking forward to your advice on how they should go about planning for their future lives (including children) together.
Estimated household expenses are Rs 26,000 per month.