Personal Financial Management

Introduction A contingency plan is an essential tool in the preparation of a retirement plan and an estate management plan. The goal of this contingency plan is guarantee the maximum possible use of existing and anticipated financial resources by coordinating all of the assets, liabilities, and other sources of income of an individual.Advertising We will write a custom essay sample on Personal Financial Management specifically for you for only $16.05 $11/page Learn More In the process of developing a contingency plan, it is assumed that and individual has the willingness and capability to undertake necessary cash and investment commitments. Furthermore, there is also the need to be uniquely identified in order to come up with appropriate recommendations. This will ensure that the plan is realistic, effective, and efficient. Discussion In the current setting, the level of risk tolerance is moderate. Therefore, the willingness to take on risks is similar t o the capacity to assume risks. Given that existing income requirements for the portfolio are minimal, there has to be a total return methodology on the continuing capital gains rather than the creation of current income. However, existing liquid assets are adequate to offer cash reserves during any emergency (Kapoor, Dlabay, Hughes, 2012). Since the wish is to retire after 32 years of active employment, the key objective is to have a balanced portfolio in order to have sufficient retirement income. In such a case, it is important to manage the financial assets by having a portfolio comprising both taxable accounts as well as two IRAs. The calculations for this plan are based on average annual inflation being at four percent with the social security inclusion being at fifty percent. The bond mutual funds are at 4% with the equities giving a return of between 5-10%. On the other hand, annuities amount to around 5% with social security COLA rates being at 3%. The personal residence a nd property growth rates are at 2%. The inflation of the college expenses stands at 7%. The family assets, cash-value life- insurance, as well as liabilities are defined at present market value (Kapoor, Dlabay, Hughes, 2012). The key strategy is to join an investment club and then to manage a portfolio of nearly eight to ten minor capitalization of stocks. Furthermore, investments will be done on mutual funds that are well managed due to their high-quality complements towards the personal stock holdings. Consequently, investments will be done in the other partner’s IRA but in a fund that focuses on high quality large capitalization companies.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The smaller IRA can be invested in an aggressive expansion small cap fund while the other taxable assets will be invested in the equity income fund, a money market fund, a global fund and finally, to a short-term bond fund. Given the existing uncertainty regarding the market’s outlook, portfolio diversification will assist in dampening volatility while providing the room to ride out any downturns arising from a given market segment. Notably, replacement costs take most of the family’s budget especially replacement of key items. Therefore, the annual income target is aimed at $200,000 and the plan is to increase it at an average annual inflation level of nearly two percent over the life expectancy. Saving current income is the key to attain financial goals while preparing for emergencies (Stovall Maurer, 2011). When it comes to the retirement plan, the social security will provide a distinctive advantage since it covers inflation-adjusted incomes. This will help to keep at bay erosive outcomes arising from inflation. Therefore, it will be essential to restructure the income together with the assets to meet current tax liabilities. Therefore, nearly 50% of the n on-pension assets will be invested in equities while the other 50% will be on fixed-income along with cash. On the other hand, pension payments will be dealt with as fixed-income assets whereby almost 70% will be invested in equities while the remaining 30% will be invested in fixed-income plus cash. Therefore, this investment will act as a source of constant income that will be used to meet the family’s daily expenses. Consequently, it will act as a foundation for growth in case the living expenses increase due to inflation. However, it is essential to consider the idea of overcoming inflation while supporting a desired lifestyle. The firmness of life insurance companies is also a growing concern due to financial troubles in the industry. Savings also offer economic control and as such, the savings will cover between 3-6 months of the living expenses.Advertising We will write a custom essay sample on Personal Financial Management specifically for you for only $16.05 $11/page Learn More Therefore, this entails maintaining a sufficient disability as well as survivor income to sustain present living standards without depleting the capital until retirement. A credit management strategy from a professional will help in avoiding dealing with credit agencies by managing the credit debt. A good debt reduction plan will help in straightening out the inaccurate credit history. For instance, Equifax from Creditnet will help to monitor the credit profiles from every bureau. It will also provide notices if any changes can result in an unmanageable debt profile and protect identity from any fraudulent acts. Furthermore, it will offer simulations on how certain credit acts being undertaken can affect the credit score in addition to providing tips on how to administer the credit score (Kapoor, Dlabay, Hughes, 2012). Under estate planning, providing for the children is a major concern and the course of action should be that all of the pro perty will be passed to the surviving partner and the distribution to the children will be after the partner’s death. The estate plan entails applying gift and estate tax credit due to access to the gift tax credit, referred to as applicable credit tax. This plan involves distributing the applicable credit total, to the children after the death of the first partner. Thus, transferring of the estate balance to the surviving partner will be under unrestricted marital deductions through a trust arrangement. Such a plan will help to minimize the amount of the remaining partner’s estate that in the end trims down the estate tax obligations (Kapoor, Dlabay, Hughes, 2012). The distribution will happen after the first death of a partner and the trust created and will ultimately distribute equal shares of the estate to all the children. If the other partner becomes involved in running the family business then life insurance will facilitate her to execute a buy-sell agreement t hat is funded from the life insurance. Furthermore, in case of death, the proceeds from the insurance will be used to buy the business interest arising from the estate. Accordingly, the children will have full control of the business, as well as the estate including the cash that they can divide among them or their heirs.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More However, purchasing of the life insurance can be done directly to equalize the estate and not to increase the value of the estate that in the end can attract estate tax liability. In order to avoid the uncalled for tax drain and provide additional money to the estate, every instance of ownership will be removed from the insured. For this reason, the marginal tax bracket should remain at 30% whereby the average tax bracket lingers at 24%. The surviving spouse will most likely continue with the existing pension payments and she should have a possible advisor who can assist in assessing the options. Therefore, assets received upon death like life insurance payments can be invested into intermediate-term fixed-income funds to have the liquidity that can be used in later on investments in various funds. Furthermore, the IRA should be turned into the other spouse IRA and then invested in a similarly aggressive expansion fund such that the asset allotment remains unaffected until a better option arises. Given the fact that death can occur when the beneficiary is a minor or he/she has developed special needs, a guardian will be appointed to take charge of beneficiary’s personal care. Therefore, a residuary clause will ensure that disposal of the estate assets following payments of all debts will be passed on the children (Stovall Maurer, 2011). The competitive line of credit from the bank will offer the capital required to run the rental real estate business. The business will be dealt as a personal net worth and it should have stable plus dependable cash flows including protection from disasters. Investment decisions are based on projections from markets and asset class. An asset allocation approach will offer the prospect for additional control over the amount of return in return for assuming further risks. The asset allocation is also a no-derivative approach that will help to minimize risks in addition to reducing the in general portfolio volatility. Holdi ng various asset classes will help to reduce the risks especially when major markets go down. In such a plan, the key concern is to ensure that the mortgage is completed by 2025, and the vehicle loan by 2014. In addition, poor health, inflation, disability, and possible tax hikes are obstacles that can impede the plan. In order to minimize tax liability and at the same time preserve more of the estate an amount of up to $13,000 will be contributed yearly to the child’s college account, so as not to incur federal gift tax charges (Stovall Maurer, 2011). Estate planning includes minimizing probable taxes, and thus help in assuring preferences concerning health care treatment. A proper estate planning recognizes what will take place in the home, investments, life insurance, the retirement plan, and additional property, especially in the event of a disability. Conclusion The above contingency plan has come up with an estate plan that not only serves the immediate needs but also the future necessities of the beneficiaries. It covers a broad series of legal, tax, as well as financial considerations. The contingency plan takes into consideration the coordination of the plan with those of estate goals. Given that investment in the family business is a crucial asset, the plan has addressed retirement and estate planning matters comprising value of the shares and the estate, the insurance, retirement planning as well as the preservation of the estate. References Kapoor, J. R., Dlabay, L. R., Hughes, R. J. (2012). Personal Finance (10 ed.). Los Angeles: McGraw-Hill Irwin. Stovall, J., Maurer, T. (2011). The Ultimate Financial Plan: Balancing Your Money and Life. New York: Blackwell. This essay on Personal Financial Management was written and submitted by user Aliza N. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

The top reasons HR is important to an organization

The top reasons HR is important to an organization These days, effective businesses take every aspect of their organization seriously and have dedicated professionals across their teams who work towards a common goal- supporting the business and positioning it for lasting success.One important team in the mix is human resources (HR), who often serve â€Å"behind the scenes† as the backbone of an organization. Their responsibilities are often essential for a business to operate effectively, and they’re at the front lines of some core business functions- from staffing and recruiting to ensuring that the needs of existing employees are capably met, and more.In fact, according to a recent article by The Balance, â€Å"A  good HR department  is critical to an employee-oriented, productive workplace in which employees are energized and engaged.† Let’s explore some of the key reasons why HR is so important to an organization.Office cultureIn many ways, HR helps set the tone of an office’s culture, incl uding everything from permissible ways of dressing to setting work hours and workplace processes. HR establishes all of those little things that help define a work environment and shape what an average day on the job is like, which helps cement an employee’s identification and thoughts on the organization at large, as well as how they’re perceived from the outside.Staff recruitmentWe all know how important having a top-tier staff is to an organization’s success, and the HR department is directly responsible for ensuring that the very best available candidates are pursued and recruited for all open positions. They also work to ensure that the reputation of the company they work for is such that it attracts top-level talent in the industry- not an easy feat in today’s ultra-competitive corporate landscape. According to The Balance, â€Å"HR is responsible for the overall recruiting of a superior workforce. Once again, HR cannot do it alone but must provide support to  hiring managers  who are also responsible for recruiting a  superior workforce. HR must provide  leadership, training, scheduling assistance, a  systematic hiring process,  recruitment planning processes, interview expertise, selection monitoring, and more.†hbspt.cta.load(2785852, '9e52c197-5b5b-45e6-af34-d56403f973c5', {});Employee benefits and perksAll of those things that come alongside an employee’s salary when they’re offered a compensation package are likely thanks to the company’s HR team, all designed to attract the best and brightest crop of employees (and in many companies, HR staff even help to set salary ranges for open positions by providing competitive market analysis). Everything from insurance benefits to vacation time, team building activities, and transportation and education reimbursement- to name just a few- can fall under their purview, and the better they are at their jobs the better they’ll be able to research, identify, and negotiate great perks to attract talent.Employee issue resolutionIn general, most of us don’t exactly look forward to having difficult or challenging personal issues that require the guidance or intervention of others, but when we do have them and they affect our work, we’re usually grateful that we have the folks in the HR department to turn to. They not only lend their expertise and experience to help deal with whatever the issue is, they can also be real advocates and allies during a difficult situation.Although the roles and responsibilities of HR departments vary across companies and industries, hopefully by now it’s clear that they play a crucial role in most organization’s operational efficiency, as well as their immediate and long-term successes.