UNIVERSITY OF DAR ES SALAAM BUSINESS SCHOOL

DEPARTMENT OF FINANCE
COURSE TITLE: PERSONAL FINANCE
COURSE CODE: FN207
SEMINAR HOUR: 1600-1700

SN MEMBERS REG NO COURSE

1 DAVIS JACKSON NJIRO 2021-04-09814 BCOMM BANKING

2 MOHAMED BHUKO ALLY 2021-04-00290 BCOMM BANKING

3 IRENE SAMWEL MDEE 2021-04-06711 BCOMM FINANCE

4 AALIYA HAFIDH ABDALLAH 2021-04-00031 BCOMM BANKING

5 LINAH RICHARD MATOLO 2021-04-06279 BCOM BANKING

6 JESCA ZATI ANGOLILE 2021-04-00423 BCOMM BANKING

7 IRENE KIGALILO 2021-04-03934 BCOMM BANKING

8 VIVIAN ELON SILAA 2021-04-11747 BCOMM FINANCE

9 ZULFA B BAGANYIULIZA 2021-04-00587 BCOMM BANKING

10 BYABATO ALISIA 2021-04-01001 BCOMM BANKING

 PORTFOLIO INVESTMENT FOR LONG TERM FINANCIAL GOALS

WEEK ONE:

PERSONAL FINANCIAL GOAL:

Our personal financial goals are to achieve long-term growth and stability while minimizing risk. We are looking for investments
that will provide a steady stream of income and capital appreciation over time. We are willing to take on some risk, but we want
to ensure that investments are diversified and well managed.

INVESTMENT DECISION:
After researching various investment options, we have decided to allocate TZS 100,000,000 across several different asset
classes. We will invest in a mix of stocks, bonds (cooperate and treasury bonds), and public transportation to achieve financial
goals and also diversify the investments across different sectors to minimize risk.
 TABLE OF INVESTMENTS;

ASSETS CLASS
INVESTMENT ALLOCATION

Stocks CRDB Bank Plc 20,000,000

Stocks Vodacom Tanzania Plc 20,000,000

Bonds Treasury Bonds 20,000,000

Bonds Corporate Bonds 10,000,000

Public Transportation Bajaj (3) 20,000,000

Short term obligation(expenses) 10,000,000

TOTAL 100,000,000
REASON FOR INVESTMENT DECISION:
We choose to invest in CRDB Bank Plc and Vodacom Tanzania Plc because they are both well-established companies with
strong financials and a history of steady growth. We also invest in Treasury Bonds and Corporate Bonds to provide a
steady stream of income and minimize risk.

Finally, invest in public transportation to diversify the portfolio and take advantage of the potential for long-term capital
appreciation. By diversifying our investments across different asset classes and sectors, we hope to achieve our financial
goals while minimizing risk.
WEEK TWO

Taxation principles can significantly impact personal financial planning. Here are some principles that can affect the
simulation portfolio:

Capital gains tax: Capital gains tax is a tax on the profit made from the sale of an asset. In the case of the simulation portfolio,
if any of the stocks or bonds are sold at a profit, capital gains tax will apply. For example;
In the given investment portfolio, stocks from Vodacom and CRDB are subject to capital gains tax. In Tanzania, the capital gains
tax rate is 10% Suppose you sell your Vodacom stocks for 25,000,000TZS, which is a gain of 5,000,000TZS. In that case, you will
have to pay 500,000TZS as capital gains tax. Similarly, if you sell your CRDB stocks for 30,000,000TZS, which is a gain of
10,000,000TZS, you will have to pay 1,000,000TZS as capital gains tax.
Income tax: Income tax is a tax on the income earned by an individual. In the case of the simulation portfolio, income tax will
apply to any interest earned on the treasury and corporate bonds. Interest income for Government bonds is paid every six
months and the money you invested (principal) is only paid at the maturity date. For example, if the treasury bond pays an
interest of 10.25% the interest earned of 2,050,000TZS will be subject to income tax of 30%, which is equivalent to
615,000TZS.
For corporate bonds the income tax is 10% of the income earned. Suppose you earn an interest income of 1,048,000TZS from
your corporate bonds. In that case, you will have to pay 104,800TZS as withholding tax.
Withholding tax: Income earned from investment in 2-Year Treasury bonds is subject to withholding tax while income on
investment in 5-Year, 7-Year, 10-Year, 15-Year, 20-Year, and 25-Year are exempted from withholding tax. Since our Treasury
bonds have a maturity of ten years therefore, we are not subjected to withholding tax. But for the corporate bond the
withholding tax rate for interest income is 10%.
Suppose you earn an interest income of 1,048,000TZS from your corporate bonds. In that case, you will have to pay
104,800TZS as withholding tax.

Tax credits and deductions: Tax credits and deductions can reduce the amount of tax owed. For example, if the individual
makes charitable donations, they may be eligible for a tax deduction. If the individual has a home office, they may be eligible
for a tax credit. These credits and deductions can help reduce the tax impact of the simulation portfolio.

Tax credits and deductions: Tax credits and deductions can reduce the amount of tax owed. For example, if the individual
makes charitable donations, they may be eligible for a tax deduction. If the individual has a home office, they may be eligible
for a tax credit. These credits and deductions can help reduce the tax impact of the simulation portfolio.

Generally, taxes can have a significant impact on personal financial planning. The following are some ways in which taxes
affects personal financial planning; reduced cashflow and reducing investment return through taxable income.
WEEK FOUR:

To achieve your financial goals, it's important to follow asset and credit management principles

In terms of asset management,

 You should consider creating a diversified portfolio that includes a mix of asset classes such as stocks, bonds, and
public transportation. In this case, you already have a diverse portfolio that includes stocks (CRDB and Vodacom),
treasury bonds, corporate bonds, and public transport. This diversification helps to spread risk and minimize the
impact of any one asset class performing poorly.
 Create a budget: Budgeting is a fundamental step in managing your assets. It involves tracking your expenses and
creating a plan to ensure that you spend less than you earn
 Build an emergency fund: An emergency fund can help you weather unexpected financial storms, such as job loss
or a medical emergency. It is recommended to have three to six months' worth of living expenses in your
emergency fund. For instance, our investment of portfolio we include 10,000,000 to cover some short term or any
emergency that might occur during our investment period
In terms of credit management principles,
 You should consider monitoring your credit score and avoiding taking on additional debt. This will help you maintain a
good credit score and avoid paying high interest rates on loans. You should also consider paying off any existing debt,
such as credit card balances or loans, to reduce your overall debt load.
 Manage credit risk by diversifying the credit portfolio, setting credit limits, and monitoring the creditworthiness of
borrowers.
 Manage the credit portfolio by optimizing the risk-return profile of the portfolio, reducing concentration risk, and
managing liquidity.
 Manage the loan portfolio by identifying problem assets and reducing their level.

The time value of money is an important financial concept to consider when investing. This principle holds that a sum of
money today is worth more than the same sum of money in the future because money today can be invested and
potentially grow into a larger amount in the future.
When creating an investment portfolio, it is important to consider the concept of the time value of money and to calculate
the present value and future value of each investment. Here is an example of a portfolio with calculations:
Stocks from Vodacom: 20,000,000 TZS
Assuming an annual return rate of 8% and a holding period of 10 years, the future value of this investment would be:
FV = PV x (1 + r)^n
FV = 20,000,000 x (1 + 0.08)^10
FV = 43,178,499.95 TZS

Stocks from CRDB: 20,000,000 TZS

Assuming an annual return rate of 6% and a holding period of 10 years, the future value of this investment would be:
FV = PV x (1 +r)^n
FV = 20,000,000 x (1 + 0.06)^10
FV =35,816,953.93 TZS

Treasury bonds: 20,000,000 TZS

An annual return rate of 10.25% and a holding period of 10 years, the future value of this investment would be:
FV = PV x (1 + r)^n
FV = 20,000,000 x (1 +0.1025)^10
FV =53,065,954.1 TZS
Corporate bonds: 10,000,000 TZS
An annual return rate of 10.48% and a holding period of 5 years, the future value of this
investment would be:
FV = PV x (1 + r)^n
FV = 10,000,000 x (1 + 0.1048)^5
FV = 16,459,564.03 TZS

Public transportation: 20,000,000 TZS

Assuming an annual return rate of 10% and a holding period of 3 years, the future value of
this investment would be:
FV = PV x (1 + r)^n
FV = 20,000,000 x (1 + 0.10)^3
FV = 26,620,000 TZS
Overall, this portfolio has a total investment of 100,000,000 TZS with a future value of
175,140,972 TZS

The financial implication of an investment of 100,000,000TZS with a future value of

175,140,972TZS is that the investment has generated a positive return on investment. The
ROI is calculated by dividing the profit earned on an investment by the cost of that
investment
In this case, the profit earned is 175,140,972TZS - 100,000,000TZS = 75,140,972TZS.
Therefore, the ROI would be:
ROI = (Profit/Cost) x 100%
ROI = (75,140,972/90,000,000) x 100%
ROI = 83.48%
This ROI of 83.48% indicates that the investment has generated a significant return
relative to the initial investment. However, it is important to note that this return is not
guaranteed and is subject to market volatility and other risks associated with investing.
REFERENCES
 Dar es salaam Stock Exchange. Retrieved from https://www.dse.co.tz/government/bond
.
 Bank of Tanzania. Treasury Bills. Retrieved from https://www.bot.go.tz/TBills
 https://www.tra.go.tz/