Personal Financial Planning Essay Example | Topics and Well Written Essays - 2500 words

Personal Financial Planning - Essay Example Jeff has now 5 years of job remaining. The best way to utilize his resources to save the money for his retirement is to invest the amount to get a good return. So that he may have enough money to complete his post-retirement plans. Jeff is also having full National Insurance contributions and has some savings. He has won the lottery ticket prize of ï ¿ ¡800,000. Now he has to use the entire amount wisely because he has various plans to be fulfilled. These plans can only be completed by having proper use of the available cash. For that purpose, Jeff needs complete personal financial planning. Now Jeff needs to be very careful to use the money in such a way that he may fulfill his plans after retirement. Obviously he would like to use his money to earn some profit on it. The financial institutions are there to help such people. They offer different rates for the investment of 5-10 years and so on. They have different policies so one should be aware enough to choose his required package of investment according to the rates. He should deposit the amount for annuity and get the reward at the end of fiscal periods. In UK market, the present rate of pension annuity is about 40% and it also varies by institution to institution. So if Jeff starts investing his money for pension annuity then this activity will be fruitful at the time of his retirement. Moreover, statistics shows that there are chances of increase in the annuity rate in coming years. Normally the pension annuity period goes to the age of 75 in UK but mostly people avail the opportunity at the time of retirement i.e. 65. Though some people go for other options to hold their finance or maximize it. That is the remedial measure to adopt such steps during the job to secure the life after retirement. During the job, this may be the best way to save money for future. But there is another fact that if anyone at the age of 65, wants to utilize his annuity amount then there will be surely reduction of 1% in profit. This is the reason people go for other options. More the time will be; more the chances to get higher profit for annuities (Murthi, July 2000). All the people whether they are skillful or not, consider the financial planning a very important thing. With the passage of time people became aware of its importance. It’s not necessary that they have the knowledge to plan perfectly for their selves or not. The thing is that they have vision of the importance o f financial planning and they want develop a financial plan for themselves to save their financial resources for the future life. The advice of an expert financial advisor also helps the individual lot. A research study shows that only 13% people are known with the skills of financial planning. Everybody has his own preferred resources to identify the needs to plan for future life (Murphy, 2010). In Jeff’s case, we need to consider the rates of different institutions and compare their rates of annuities. The highest rate of return will be considered. Basically, the rates are linked with the period of time you are investing money for. If the time period is longer, the rate will be higher and vise versa. The investor gets the highest rate in the later years so that is the main purpose of pension annuity. This thing helps the individual to secure their future after retirement. So this will be beneficial for Jeff to invest money in pension annuity and make it more of the original . We can go for fixed annuity. In such annuity, the annuity is sure for some years e.g. we say that we have an annuity for 5 years. So it is the annuity in which number of years is fixed. The financial institution will make the payment at the end of that period. Jeff can get more of this plan. Another option is the Maximum Investment Plan offered by different