Information :

You are an experienced personal financial planner working in Oshawa, Ontario. On November 15, 2023, you met with your new clients, Gail and Harold Murphy. Gail and Harold have been married for 9 years and have a 7-year-old daughter named Sara. Harold is age 45 and Sara is 40 years old. Gail is pregnant again and the Murphys are expecting their second child in 4 months.

Two months ago, Gail received a tax-free inheritance from her late father in the amount of $260,000. Gail and Harold used $40,000 of the inheritance to each contribute $20,000 to their own RRSPs. The Murphys do not make regular contributions to their RRSP accounts. In the past, the Murphys have made RRSP contributions only when they have extra money at the end of the year. The remaining balance of the inheritance, $220,000, was deposited by Gail into a joint savings account (joint with Harold) at the local bank because they were unsure how to invest their money. The interest rate on this savings account is 1% per year.

The Murphys are expecting a rate of return on their investments of 6% once the money is invested properly.

The Murphys have decided they need a new, larger car, as soon as possible, to transport their growing family. They would like to replace Harolds small car with a family van. Their maximum price range before all applicable taxes and fees is $50,000. The Murphys are not sure if they should buy or lease the new car.

REQUIRED:

1. Identify two changes that you would recommend for improving the overall rate of return on the clients investment portfolio.

2. Describe the four categories of investment ratios used by investment advisors for analyzing a companys financial information for potential purchase.

3. Explain to your clients two strategies that you will use to minimize investment risk in their portfolio.

4. List and explain three (3) advantages of leasing a car over buying a new car.