Financial Planning of Soniya and Anil

Manisa KC $(2214326)$

University Canada West

FNCE $627$: Personal Financial Planning

Ross Ghouchani

Due Date: $8$th November $2023$

Table of Contents

Introduction $3$

Family Personal Information $3$

Situation Analysis $4$

Assumptions and Key Considerations $4$

Recommendation $6$

Financial analysis $6$

Net worth $8$

Cash Flow $8$

Strategies $9$

Retirement Planning $9$

Education $9$

Major Purchase $10$

Emergency Fund $10$

Feedback from the group Members $11$

References $13$

Introduction

This case study provides the detailed financial planning of Soniya Dahal and her husband Anil Sharma who got married $5$ years ago, and they have three children now. Soniya owns a company that helps her generate millions of dollars in a year and her husband is a working man who earns thousands of dollars per year.

This report further explains the thorough financial analysis of these couples with required recommendations and strategies where they can improve their financial planning. Calculating their income, expenditures, cash inflows, and outflows are also presented to achieve their financial objectives. Hence, the report is based on a family who is specially aimed to gain retirement benefits with the future of their three children.

Family Personal Information

Soniya Dahal: DOB February $25,1970$

Anil: DOB March $12,1968$

They have three children:

Jasmin: DOB April $5,2005$

Bibek: DOB May $12,2006$

Heera: DOB June $9,2007$

Situation Analysis

Annual Income of Soniya $$ CAD $130,000$

Annual Income of Anil $$ CAD $110,000$

Business Account Balance $-$ CAD $21,000,000$

Dividend Income $-$ CAD $60,000$

RRSP for Soniya $-$ CAD $275,000$

RRSP for Anil$-$ CAD $200,000$

Investment Account $$ CAD $5,000,000$

Owns a plot in Vancouver $$ CAD $200,000$

Annual Expenses $$ CAD $20,000$

Mortgage Payment $$ CAD $5,000$

Both Credit card Payment $2,000$

Assumptions and Key Considerations

They must operate under the assumption that current conditions will persist in the future, and it's important to emphasize that their planning is not overly optimistic.

In Canada, families can benefit from government policies like the Canada Child Benefit $($CCB$),$ providing tax$-$free financial support until the child turns $18.$

Retirement: The standard retirement age in Canada is $65,$ currently Soniya is $53$ and she will retire at $65$ and her husband is $55$ years old, and he will retire after years $10$ years.

Retirement Benefits: At the time of retirement both will receive pension benefits such as a Canadian Retirement Plan, for example: retirement people can get pensions based on their contributions which is based on the factor as counting the total working hours. Similarly, Old Age Security $($OAS$)$ is also one of the benefits that people aged above $65$ get pension facilities with the calculation of the total amount that people live in Canada after the age of $18.$

Moreover, a Registered Retirement Savings Plan $($RRSP$)$ is a plan that is contributed by people working in Canada which is regarded as tax deductible. Until the funds are withdrawn, it continuously grows tax deferred.

Inflation rate: Both will retire after $37$ years and at that time the inflation rate is expected to be $2\mathrm{.}1$ to $3\%.$ Therefore, the inflation rate can affect the financial plan of individuals. So$,$ all the expenses including household, and loan payments are not stable and can affect to maintenance of the income statement.

Tax System: Both are residents of Canada, so they fall under the tax category of Canada. Canada offers multiple tax benefits to support families. Canada Child Benefit $($CCB$)$ is one tax benefit that families with kids are offered to assist their children raised under $18.$ Additionally, the medical tax credit is also a popular benefit that the family members are eligible to claim medical expenses including their spouse and children with the medical coverage of health medications, and dental services $($Hulme et al$.,2015).$

Education Expense: Due to increments in tuition fees every year there is a risk of increasing the children's education expenses $($Skultety et al$.,2020).$

Investment Returns: Considering them is crucial when making financial plans, mainly if retirement or comparable long$-$term objectives are the focus. You may project a diverse investment portfolio to provide an average yearly return of between $6$ and $8\%.$ While calculating these returns, asset allocation and risk tolerance should be taken into consideration.

Income Growth: To maintain your level of life and reach your financial objectives, you must increase your income. Future earnings projections need assumptions about company growth and wage increases.

Recommendation

It is recommended that Soniya and Anil consider diversified investment based on the abobe information calculate possible ratio