financial life cycle brochure

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| Your Financial Life Cycle

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| In your early 20s? - start saving today...............................................2
| Establish an emergency fund
| Paying off university fees and student debts
| The benefits of compound interest
| Early pension planning
| In your late 20s and early 30s... it may be time to tie the knot....3
| A financial merger
| To buy or rent, and where?
| Prepare for the unexpected with health, life and disability insurance
| In your 30s… you may have a baby on the way...............................3
| Having a child
| Educating your child
| Now you have a growing family, what next?.....................................4
| Considering a growing family
| Education costs for international residents
| Retirement considerations
| Retirement location
| Enjoy your retirement..............................................................................4
| Trust and estate planning
| Buying a second home
| Travel the world and enjoy retirement
| Assisted living
Someone who invested US$500 a month at 6% per
annum from the age of 30 until their retirement at 65
would end up with a savings pot of around US$693,988.
On the other hand, an individual who started investing
five years earlier, at age 25, will have US$963,625
in savings by the time they reach 65, having only
added US$30,000 extra of their own money to the pot.
Don’t worry if you are no longer in your 20s and you
haven’t started to save. Just promise yourself to start
saving today.
Only an estimated 12% of multinational companies
offer their employees International Pension Plans
(IPP’s) as part of their perks package. If yours does not.
then there is a vast variety of different traditional, local
and international bank instruments that can be used to
manage your money. However, when it comes to saving
for your future, it is best for you to speak to a financial
professional who can ensure that you are properly and
safely investing your hard earned money1
.
The starting point for financial planning during
this phase is establishing an emergency fund of
approximately six months of income. This fund is
your self-insurance in case you lose your job or have
an unexpected health event that costs more than
your health insurance covers. The discipline of having
an emergency fund is a constant during your entire
working life, although it may be possible to taper and
eventually eliminate this fund as you near retirement.
At this stage in life, many individuals have debt from
their student days. These loans vary depending on the
type you received. Usually, loan repayment begins nine
months after you graduate, leave school, or drop below
half-time status. At the end of this grace period, you
begin repayment and are allowed up to 10 years to repay
the loan in full. Saving while also paying off these debts
can be difficult but the earlier you start investing the
more money you can make on your investment.
1
http://www.austenmorris.com/investment-planner
| The benefits of compound interest| Establish an emergency fund
| Paying off university fees and student debts
| Early pension planning
Your Financial Life Cycle | Contents
| In your 20s? - start saving today

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2
http://money.cnn.com/2013/08/14/pf/cost-children
3
http://www.theguardian.com/money/2011/jul/15/cost-baby-first-year
When joining in marriage, we are forming a financial as
well as an emotional partnership with another individual.
Now there are three financial entities to consider… yours,
mine and ours. One of the first questions is how to handle
these considerations. We suggest retaining individual
accounts where each partner contributes to a joint household
account. This amount could be based on a pro-rata division
of income, or simply each party contributing equally to
the household expenses. In addition to the bank accounts,
property is an important financial aspect of combining
lives with a partner.
While planning the future with your significant other, one
of the most important questions you have to answer is
whether you will rent or buy property. The answer will
vary greatly depending on where you choose to live
internationally. Once you have an idea of what your living
costs will be, you should come up with a budget and draw
out a timeline. If you are looking to buy a piece of property,
there are a few factors that you need to keep in mind: the
minimum down payment required, whether or not you
are approved for a mortgage, and the bank’s interest rates.
| A financial merger
| To buy or rent, and where?
| Educating your child
| Prepare for the unexpected with health, life and
disability insurance
During the property hunt, another key aspect is often
overlooked is any tax you may have to pay on the purchase
or sale of your property. It is highly recommended that you
shop around for good property investment opportunities.
During your early working years, the greatest financial
risks are driven by the fact that you have a fairly long
period of working years ahead of you and you are likely
to have significant future expenses e.g., a mortgage and
college tuition for children. The risk is that if something
happens to you to prevent you from working, those who
depend on you will not have the income that you and
they had expected. Health, life and disability insurance
can all help you manage these risks. It is critical that
you use such products to protect yourself and your
family. Health insurance protection is a constant need.
Though life and disability insurance may not be critical
before marriage, it becomes so once you are married.
For more information on applying for life insurance,
please check out the link provided:
http://www.austenmorris.com/life-insurance/
| Having a child
| In your 30s… you may have a baby
on the way
| In your late 20s and 30s... it may be time to tie the knot
The average cost of raising a child is at least US$241,0002
.
However, that cost can vary dramatically depending on
where you live and your educational requirements.
The U.S. Department of Agriculture (USDA) estimates
that, even before your child arrives, you will spend
between US$6,800 to $10,600 for prenatal care, labour
and delivery depending on where you live and the type
of birth. If you live in China, for example, international
families are encouraged to look for affordable birthing
packages in foreign hospitals. Since packages range from
RMB70,000 to RMB300,000 there is a lot to consider. Add
another US$8,000 to $10,000 for first year expenses like
baby furniture, clothes, diapers, doctor’s visits, and day
care and you may have shelled out nearly US$20,000 by
baby’s first birthday3
.
Now, as a parent, you should be aware of the education
fees that you may be required to pay out-of-pocket in
addition to whatever is available through your company
package. Most parents want their children, from the
age of two years, to attend an international primary
school. They usually pay from US$24,000 to $40,000
(RMB150,000 to 250,000) per year. In addition to
these potential costs, you will have to consider that
the cost of education is rising faster than inflation.
You should conduct research, make comparisons and,
most importantly, sit down with a financial consultant
to determine how much you need to start saving now.

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Since governments do not fund
private colleges and universities
and often do not subsidize
international residents, your
costs in tuition and fees will,
on average, be higher than if
you were living in your home
country and using public
institutions. HSBC put the
average annual cost of study
in the US – including tuition
fees and living expenses – at
US$36,564. At the very top-tier
US universities (the majority of
which are private non-profits)
fees and living costs are likely
to add up to around US$60,000
per year4
.
4
http://www.topuniversities.com/student-info/student-finance/how-much-does-it-cost-study-us
5
http://ssa.gov/policy/docs/ssb/v65n3/v65n3p1.html
| Education costs for international residents
As your family grows, you
may have to look for larger
housing accommodation.
However, property size may
not be your only concern.
Areas that offer a safe
neighbourhood environment
or have top quality schools
located nearby are usually
in high demand by parents
who want the best for
their children. Often these
demands come with a hefty
price tag. It is situations like
these that remind people
to be aware of the wide
disparities in educational
and living costs as they move
across cities and countries.
These disparities should be
taken into account when
you are looking for a house
because, while you may be
able to afford your current
lifestyle, moving can greatly
affect these costs.
Every individual’s situation is
unique and everyone will have
a different investment strategy
for the best way to generate
the required income for their
retirement. However, everyone
should take trust and estate
planning into consideration
during both the accumulation
and retirement phases of their
investment planning. Trust and
estate planning means having
your affairs in order so as to
minimise any tax liabilities and
ensure that your family is properly
cared for after your death. It may
also include enabling your family
and loved ones to make decisions
on your behalf in the event of
your mental incapacity.
For those who have already
travelled to the four corners of
the globe retirement often
becomes a time to move to their
favourite destination on a semi-
permanent basis…. unless it is in
a less expensive location, owning
a second home can cost about as
much as your principal and
private residence. Other variables
include the type of dwelling and
whether it is occupied all year
long or just part of the year.
According to the National
Association of Realtors, the
median price paid for a vacation
home in 2013 was US$168,700.
If the time comes when you can
no longer manage daily living in
your own home or with family
members, an apartment in an
assisted living facility could be
the next best thing. If you, like
many, were thinking that the
government will cover the cost of
assisted living, you may be very
disappointed.. If your anticipated
need for assisted living is still 30
to 40 years down the road, you
might look into buying long-term
care insurance. This insurance is
more affordable the younger and
healthier you are at the time of
purchase, but if you wait too long,
you may not be eligible for it.
The freedom to get in the car, take
a bus or fly on an airplane to a
faraway destination is one of the
first things many retirees want to
experience. Others begin by going
on cruises, or continuing a life-long
“cruise” habit with more intensity
and seasonal flexibility this time
around. With the average cost of
a summer vacation coming in at
US$1,180 per person it is important
to set aside funds for travelling in
your yearly budget. Keep in mind
travel dates as off-season trips can
cost far less than exotic vacations
taken during peak travel periods.
This is one of the many benefits of
being retired that you may enjoy if
you have planned properly.
When it comes to retirement income planning, there is no
perfect method or simple solution. You will need to devise a
strategy that allows you to generate your desired retirement
income through the integration of your pension resources with
your investment assets. A retiree will, on average, need to
replace between 70 to 80% of their pre-retirement income5
.
An employee who made US$75,000 before taxes should expect
to have between US$50,000 and $60,000 already saved for every
year once they retire in order to maintain the same lifestyle
post-retirement. Some common questions from international
clients include, how can I achieve my retirement goals more
quickly? how do I protect my pensions? In the case of disability
or death, how can I make sure that my kids can still afford to go
to a good university?
In terms of compound interest,
you will find that a small
early investment will tend to
outweigh a large investment that
is made later in life. If you invest
early, you can save less money
into your pension fund and still
gain higher returns in the long
run. Those returns can then be
put towards a new home in the
location of your choosing. With
proper planning, the possibilities
for your future retirement and
its location are endless.
| Considering a growing family | Trust and estate planning
| Buying a second home | Assisted living
| Travel the world and
enjoy retirement
| Retirement considerations | Retirement locations
| Now you have a growing family, what next? | Enjoy your retirement

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In the countries we call home, our purpose will always remain the same:
Austen Morris Associates is committed to rewarding partnerships.
After you have read the Education Fee Planning guide, please contact us
through our Live Chat, at one of our Office Addresses below or email us
one of the addresses below.
| Our Global Reach
Enquiries:
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Shanghai, 200023, China
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