Gillian Carvalho and Sean Chugh are 50 years old and starting to plan financially for their retirement. They have paid off the mortgage on their modest home and have $100,000 in RRSPs and $40,000 in TFSAs. All of this money is invested in short term GICs that are about to come up for renewal. They want to retire at age 65 with a before-tax income of $70,000 p.a. Between them they currently earn $100,000 p.a. after all deductions. For the next five years they will still be helping the children a bit financially, and so they will save $20,000 p.a. For the 10 years after that they can save $30,000 p.a. They have no employer pensions. The two of them together will get $32,000 p.a. from CPP and OAS starting at age 65. They have come to hire a financial planner to ask his advice on investing their current nest egg and future savings.

Provide an initial investment allocation for this family, calculate the expected return on this allocation and explain why you chose that allocation.