Unit 39 Financial investment Opportunities
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The recent economic turmoil has created an uncertain situation in the financial market. Investors and major financial institutions have experienced lot of problems leading to a ‘credit crunch’. In such an unstable period, it has become very difficult for businesses of all sizes to attract investment.
Finance 4 U is a financial company specializing in providing advice and guidance to those who are about to secure funds required for investment. You have recently been appointed as a junior financial consultant by the company. Your job is primarily to assess the investment needs of clients and provide them with the best advice.
Note : This assignment covers Unit 39 - Learning Outcomes 1.0, 2.0. 3.0 and 4.0
a) The managing director of the company is increasingly worried about the incorrect advice given to clients. He firmly believes that :
‘if clients were made aware of the various risks, they would have exercised more caution in securing investments’.
He has set you a major task as follows :
· To research into the various risks facing businesses and individuals while considering investments and investment products
· To produce a user guide on the various risks
The user guide is aimed at potential clients and should be in an ‘easy to read’ format.
b) Since your job involves giving advice to clients on the range of investment products offered by various institutions, you need to be fully aware of these. It is important that the information given to clients is accurate.
Produce a detailed report on the investment products offered by :
2) building societies
3) insurance companies
4) national savings
Include in your report illustrations and examples of products from these institutions.
c) Your final task is to deliver a presentation to your colleagues of Finance 4 U on the suitability of the investment products in meeting the needs of clients.
You must ensure that you analyse the needs of different people..
Your presentation must include relevant examples to support your points.
Task 1 covers assessment criteria 39.1.1, 39.1.2 and 39.1.3
Having completed your first task, the director would like you to undertake some work around the ‘UK System of taxes’. The main aim is to produce relevant documentation which will enable the company provide better services to its clients.
You will carry out research into the tax mechanism in the UK and ensure that areas such as income tax, capital gains tax and tax-free investments are covered.
a) Using up to date information available on taxes in the UK, produce a report on income tax liability of UK residents. You must ensure that you cover current legislations and government rules as applied to income tax. In order to support your points, you must add to your report an illustration using the data below :
Mike Parks works as a manager in B Bank PLC in London. He draws a salary of £ 42,000 per annum. Besides the income from his job, Mr Parks has money saved in the bank of the amount of £20,000 (interest of 2.99%). He has also predicted that he will earn dividends from shares he owns. He believes that his earnings from shares will be £ 1,500 in the current financial year.
Using the above data, produce an accurate Statement of Taxes showing all tax liabilities for Mr Parks. You must include step by step calculations (with explanations) for the financial year 2013-2014.
b) The next type of taxation which the director of Finance 4 U has asked you to look into is Capital Gains Tax (CGT). This area sometimes proves to be confusing to many people.
i) Write brief notes in simple words about the various elements of Capital Gains Tax. Use examples to illustrate your points.
ii) Mr Parks had some issues with his Capital Gains last year. When he received a demand for CGT from Her Majesty’s Revenue and Customs, he was confused with the amount that he was asked to pay. His Capital Gains for year 2013-2014 was £ 26,200.
Carry out necessary calculations showing Mr Parks CGT liability for year 2013-2014.
Task 2 covers assessment criteria 39.2.1, 39.2.2 and 39.2.3
a) Having completed your second task as the junior financial consultant at Finance4U, the director has now asked you to get involved in providing information to clients on their specific needs.
The main aim is to produce relevant documentation which will enable the company provide better services to the clients. In order to guide through the exercise, you have been provided with 3 brief cases.
Case 1 - Sally Thompson is 55. She has been a school teacher for 25 years in Manchester. Over this time, she has saved £ 30,000. She feels that she’s not getting enough interest from her bank on her savings. She has been thinking of investing the money.
Case 2 – Vik Patel, 23 has just been offered a job with an IT firm in London having successfully completed his degree. His parents, as a congratulations present, gave him £5000. Vik does not want to ‘splash out’ the money but would like to invest in it.
Case 3 – Ade Koffe, 45 is a successful entrepreneur based in Surrey. His business spans across Europe. He has now decided to capitalize on the current ‘economic slowdown’ and invest some of his wealth.
i) For each of the above cases, carry out appropriate research on the possible investments available to each individual. Using examples, produce a comprehensive guide on the type of investments that each individual can engage in.
b) In order for Finance 4 U to provide sound financial advice, the directors would like to make it clear to their clients what a financial advisor does. Write notes on the function of financial advisers and how to select one.
c) Information about investment and legislations is widely available in the public domain and specialized press. Write a report addressing the legislations related to investment. Provide and explanation of the rights and protection of investors.
Task 3 covers assessment criteria 39.3.1, 39.3.2, 39.3.3 and 39.3.4
a) Using examples, explain the financial pages of the Financial Times. Provide hints to the above investors how Financial Times can be a good source of information. Produce a concise report.
b) Investors should be able to understand information on Stock Exchange also interpret such information. Using suitable examples and illustrations, carry out Stock Exchange ratios. Write brief notes on these addressed to the above investors.
c) Describe and evaluate the purpose of collective investment. Include illustrations in your report.
Task 4 covers assessment criteria 39.4.1, 39.4.2 and 39.4.3
Translation of the general grading criteria to this assignment
Outcomes 39.1, 39.2, 39.3 and 39.4
39.1 Understand the range of investments available to individuals
39.2 Understand how the UK system of taxation affects investment decisions
39.3 Understand investors’ needs
39.4 Understand the working of the stock exchange and the range of investments available.
39.1.1 assess the attitude of individuals to risk when evaluating
the suitability of investments
39.1.2 evaluate a range of investments available from banks,
building societies, insurance companies and national
39.1.3 analyse the suitability of these products for different
39.2.1 calculate income tax payable for various individuals and
couples, including income from dividends and interest
39.2.2 calculate capital gains tax liabilities in different situations
39.2.3 evaluate tax-free investments and their importance to different tax payers
39.3.1 identify the needs of different investors
39.3.2 design portfolios of investments for different individuals
39.3.3 explain the functions of financial advisers and how to select one
39.3.4 explain investors’ rights and the protection available to them
39.4.1 explain the information in the financial pages of The
39.4.2 calculate stock exchange ratios and be able to explain what they mean
39.4.3 describe and evaluate collective investments, eg
investment and unit trusts OEICs and bonds.
Identify and apply strategies to find appropriate solutions
Select/design and apply appropriate methods/ techniques
Present and communicate appropriate findings
M1 A range of sources of information have been used to access issues around a range of financial investmets – including websites and local organisations with whom the learner is familiar. Information provided to Finance 4 U which is clear, coherent and accurate on UK system of taxation, investor’s needs and the stock exchange
M2 Complex data has been effectively synthesised and processed to provide a detailed analysis of the organizational financial requirements; All calculations are clear and accurate, steps have been explained
M3 – Information has been presented in a clear and coherent manner;
An appropriate structure and approach has been used for the report and presentation. This includes clearly identified financial investments
Appropriate technical language and terminology have been used in the report.
Use critical reflection to evaluate own work and
justify valid conclusions
Take responsibility for managing and organising activities
Demonstrate convergent, lateral and creative thinking
D1 – Information including clear illustrations and examples that leads to accurate decisions at Finance 4 U ad its clients
The validity of financial investment and taxation have been checked/judged to ensure that they present an accurate picture to meet overall needs.
An evaluation of the chosen financial investment methods have been done.
D2 Autonomy and independence has been demonstrated by the learner throughout. Minimal tutor guidance and advice has been sought when accessing relevant information.
The substantial range of activities and investigative work involved in the analysis of financial investments and their applications.
D3 Up to date and relevant information using examples on current financial investment resources; Recommendations on the use of financial investments in making accurate decision
The learner also demonstrates creativity in how financial investments and taxation can be used at Finance 4 U Conclusions drawn on how these impact on organisations.
End of assignment