Xavier University Ateneo de Cagayan School of Business and Management Business Administration Department

In Partial Fulfillment of FIMN5: Investment and Portfolio Management

Personal Financial Investment Plan for Mr. Melchor Y. Malhin Jr.

Submitted by: Malhin, Jean Mariz B.

Submitted to: Maam Flor Victoriano March 10, 2013

CONTENTS

I. II. III. IV. V. VI.

Introduction Current Financial Situation Financial Ratios Investment Objective Risk Profile Recommendation

I. Introduction
My Client is my father namely, Mr. Melchor Yano Malhin Jr. ,is an employee of Solomon Construction Supply-Hardware at Osmena Street Cagayan de Oro City and at the same time a businessman. He is married to Jessie Balolong Malhin, a house wife and also a businesswoman. She helps my father in operating our business. They are 5 in the family with children of 3 namely: John Melchor B. Malhin III, Jean Mariz B. Malhin and Jimberly Mae Malhin. My client wants to know on how he can invest his portion of money in different securities to secure the needs and future life of his family when the time comes that he wanted to retire in his work.

Client Personal Background: Name: Melchor Y. Malhin Jr. Age: 51 years old Sex: Male Marital Status: Married Home Address: Blk4 Lot8 Piaping Puti Macabalan, Cagayan de Oro City Occupation: Sales Employee/ Businessman Date of Birth: March 28, 1963 Place of Birth: Siquijor Nationality: Filipino

Spouse: Name: Jessie B. Malhin Age: 51 years old Sex: Female Marital Status: Married Home Address: Blk4 Lot8 Piaping Puti Macabalan, Cagayan de Oro City Occupation: House wife/ Businesswoman Date of Birth: December 05, 1962 Place of Birth: CDO Nationality: Filipino

Children Profile Name John Melchor B. Malhin III Age Sex Birth date Occupation 20 years old male April 3, 1993 None Jean Mariz B Malhin 19 years old female March 12, 1994 Jimberly Mae B. Malhin 14 years old female February 11, 2000

Graduating college Grade 7 student student

Marital status Address

Single Macabalan

Single Macabalan

Single Macabalan

Annual Income: Sales Employee: (P18,000x12months) = P216,000.00 Business: (P50,000x12months) = 600,000.00 P816,000.00

II. Current Financial Situation Cash Flow Statement- Current (For the year 2013)

Cash Inflow

Amount (In PHP)

Cash Outflow

Amount (In PHP)

Annual Salary Business Profit

216,000.00 600,000.00

Electricity Water Gas and Fuel Groceries Educational Plan Coco Life Insurance Children Allowances Tuition Fees Miscellaneous

13,200.00 4,800.00 12,500.00 60,000.00 20,000.00 25,000.00 60,000.00 96,000.00 30,000.00 P321,500.00

TOTAL

P816,000.00

CASH SURPLUS Inflow Outflow P816,000.00 321,500.00 P494,500.00

Statement of Assets, Liabilities and Net Worth As of December 31, 2013

Assets PERSONAL PROPERTIES AND OTHER ASSETS Cash in Bank Furniture & Fixtures Jewelries/Accessories Life Insurance cash value Educational plan Sub-total REAL PROPERTIES House and Lot Sub-total TOTAL NET WORTH Peso Liabilities NONE Peso

50,000.00 10,500.00 10,000.00 75,000.00 100,000.00 245,500.00 200,000.00 200,000.00 415,500.00 P445,500.00

III. Financial Ratios

Mr. Melchors Financial Ratios Liquidity Ratio Liquidity ratios are used to determine a companys or investors ability to meet its short-term debt obligation. And for my client Mr. Melchor it is not applicable to him to pay short-term debt because he has no liabilities and he is not in the level of high risk of losing his money. Liquid Assets to Net worth Mr. Melchor has adequate liquidity that he may have enough cash available to pay its bills. Solvency Ratio Since Mr. Melchor has no liabilities on his account, there is a surplus of money and he has no greater probability to default on its debt. Savings Ratio Mr. Melchor has more capacity on consumer spending.

IV. Investment Objective

The clients main goal is safety, income and growth. Mr. Melchor wants to have significant cash flow and to accumulate income before retirement upon investing because Mr. Melchor wants to retire on his work at the age of 60 and to focus more in his (our) business. He seeks current income, but also seeks income and capital growth over time with lesser risk. His portion of income would diversify into different investment securities and his investment earnings would go to personal desires such as in sports, travel and stuffs, business, medication, and the top priority is the educational purposes and the future life of his children for he has a family to support.

V. Risk Profile
The client is a risk averse investor; an investor who is looking for "safer" investment. The client seeks for a level of return with less risk because he has no experience in investing. To have an incremental income and limit the downside risk, the percentage of risk from 5%-10% is the range that the client willing to take. The client wants the return of his investment in 6-10 years because Mr. Malhin wants to retire at the age of 60.

VI. Recommendation
Mr. Malhin has an available cash of P50,000.00. In order that Mr. Malhin could achieve his objective, I recommend that client should deposit the 50% P25,000 from cash available to different accounts in Metro Bank for his liquidity needs and the remaining cash balance of P25,000, the 30% of it will be allocate to fixed income securities in highly trusted bank and easy to access when it comes in investing funds, which is BDO because Mr. Malhin wants to secure his money and fixed income generate a steady cash flow of income and 20 % in equities to sustain and generate income part of his investment.

Diversification
20% 50% 30% deposits in Metro Bank Fixed Income equities