Sarah Jones Has Been Referred To You By A Friend As She Needs Some Assistance: Personal Asset Management Case Study, UWA, Australia

Case Study Information

Sarah Jones has been referred to you by a friend as she needs some assistance to sort out her investments and superannuation accounts. During your initial meeting, Sarah provides you with the following information about her current personal situation and financial position.

Sarah turned 52 years old in June 2020. She separated from her husband of 20 years in 2015 with their divorce and property settlement being finalized in 2017.  Sarah is enjoying her new “single life” and has no family to support financially. She is also not looking for a serious relationship at this point in her life and wants to set things up to ensure she is financially independence.  Although COVID has caused some issues with how she works, Sarah’s employment is secure and she currently earns a good salary of $85,000 plus employer superannuation contributions working as a practice manager for a larger medical surgery.

She owns and lives in a townhouse in Oatlands, which was bought when she separated from her husband.   She purchased this property in 2016 for $455,000.  Sarah believes the property is worth approximately $520,000 today as one of the neighbors sold their unit in August for that price. Although she needed to take on a mortgage to buy the property, Sarah repaid this amount in full when the financial settlement with her ex-husband was finalized.  There is currently no mortgage on this property and Sarah takes great comfort knowing that in the worst-case scenario she owns her own home and will have a place to live. Sarah has her personal contents insured with GIO, with cover in place for $110,000.  The building is insured through the strata.

Before he died 6 years ago, Sarah’s father gave her a Pro Hart artwork, which he said: “would be worth millions one day”.   The last time Sarah got the painting valued, she was told it was worth somewhere between $5,000 and $8,000.  Sarah does not really see this as an investment and just has it on her lounge room wall as a memory of her late father. Friends have suggested looking at buying more artwork as an investment opportunity.

Sarah is quite concerned about debt although she has a credit card, (limit $10,000), which she uses to pay all of her living expenses to take advantage of the frequent flyer points.  She has an automatic debit set up to ensure this is paid off each month before having to pay any interest.

Sarah’s car is an 8-year-old Toyota Corolla, which is insured comprehensively for $6,500.  Sarah would like to buy herself a new car and thinks there should be some bargains due to the current economic conditions. While she is not yet sure what sort of car she will buy, she does think she will need to spend about $60,000 in total.  She was also planning an overseas holiday in 2021 and intended to spend about 2 months traveling around Europe.   Although currently still in the planning stage, Sarah thinks she will need about $30,000 to cover all her costs for this holiday. Due to the current travel restrictions, she thinks she may need to defer this trip until 2022 or 2023.