Dr. Pat has practiced as a Medical Doctor for the past 25 years and his current income is $350,000 per year. Over this time period he left his financial decisions to his wife. She invested his income, paid the family bills and generally ran the finances in their home. Recently he has gone through a divorce and is now looking for a financial planner to assist him.

You have spent 30 minutes chatting with Pat, and it has become evident that Pat is financially illiterate and has little knowledge of the most basic concepts (KYC indicates likely a Conservative Balanced Investor). He brought a 2-minute YouTube video to the meeting that he saw last week trying to explain financial concepts. He pulls out his phone shows you the video and asks you to explain to him some of these concepts including compounding, time value of money, how you calculate present and future value, annuities and perpetuities. You realize that this high-income client that you want to assists needs to have a basic understanding before you can suggest any solutions.

Dr. Pat then states that he is 50 years old, reaches into his briefcase and pulls out the following documents. He tells you he has $125,000.00 in personal debts, owns a condo outright worth $1.3 million, shows you a GIC that is expiring this month worth $750,000.00, and a chequing account with a balance of $150,000.00 and he states that he has two gold bars in a safety deposit box worth approximately $100,000.00

He then says that he wants to retire by the time he is 62 and wants at least $150,000.00 a year to live on for 20 years, and the ability to bequeath $1 million dollars to his favorite charity.

He then says" I would like you to explain and show me how I can achieve all this".

 

Requierment 

 

First explain the concepts of time value of money, PV, FV, compounding, annuities and perpetuities. Pat is a visual learner and remember this individual you are speaking with has limited knowledge. Use at least three diagrams to explain the concept. These must include the use of a timeline in each of the diagrams.