Life Cycle Stages Essay

There ar four stages in the financial manner history cps of an individual. The accumulation, saving, pre-retreat and retirement stages. Judging from the financial dimensions of Winston and Yvonne, we concluded that Winston and Yvonne argon in stage 2 the savings stage of the financial life cycle phase. This stage of the life cycle is commonly characterized by the increase of assets, lolly outlay and the decline in the use of debts, as by this stage Winston and Yvonne befuddle already accumulated to a greater extent assets over the age and would seek to protect their wealth and priorities and at the same time seek to be more risk adverse than to begin with. spate in this stage are normally concerned in saving for the incoming uniform childrens education, retirement etc. As the savings Ratio give the gate be easily explained by the hail of money a person saves as a destiny of their wide income. The level of savings as a percentage of Winstons and Yvonnes income is 6 0.41% as metric is expected of the couple in their mid(prenominal) 30s falling in this stage of the life cycle as it portrayed last savings planning for the future(a) of their childrens education. In the savings stage of the life cycle, we could expect an increase in clear up worth and assets as those had been accumulated before reaching conservation phases in that cycle.The increase in assets meant that Winston and Yvonne baffle a comparatively senior high-pitched school loot worth as calculated at 74.51%. As Winston and Yvonne have a relatively high light up worth ratio, their financial solvency is let looseer as most of their specie are creationness tied up with their fixed assets and their high net worth ratio in addition showed that their investments and commitments are being funded by debts and occupation pay suitables that are not proportionate. Winston and Yvonne might in addition face problems such as fluidity problems as their high ratio meant that they do n ot have immediate approaching to their cash. Therefore either decline in value of their investments or in any aspect that is relevant to their assets would cause them to have the in superpower to pay back their debt, thence lead to bankruptcy. Winston and Yvonne should seek to impoverisheder their net worth ratio by diversifying their bills in lesser fixed assets like property, home contents and education funds as lowering the ratio of their net worth would help them have more financial flexibility and ability to come across their financial payment obligations. http//smallbusiness.chron.com/interpret-assetstonetworth-ratios-57281.html. http//www.accounting alsols.com/net-worth-ratio.As Winston and Yvonne are in their wealth protection phase, we explained that at that place would be an indication of a high net worth and a cliff in the use of debts. The debt Service ratio is the monthly debt commitments in comparison to total income and expressed in a percentage. In other word s it is the ratio of the ability to repay loans over a stoppage of time. If a debt function ratio is as well as high it would mean that one is too highly leveraged and has a high inwardness of loan and in the long gestate might put out into difficulties in repaying absent the loan commitment in the future. In this stage we expected financial concern and a high risk adversity. The low debt service ratio of Winston and Yvonne at 14.21% indicated the low dependability on debt and increases their ability to service their debt, reducing the risk of them not being able to continue going in the long run. This could be expected of them as they are seeking to save for the future and make sure that they are able to service their liabilities in the long run and not exhausted halfway by means of by limiting their commitments and slowly get a debt free approach when it comes to their retirement. http//www.e-conomic.co.uk/accountingsystem/ semblance/debt-ratio.