Majid and Mina are a couple living in Ontario. They have one child, a daughter named Hana. Hana is 11 years old and was born in Ontario. Majid and Mina value post-secondary education, and are planning to cover the cost of at least a 4-year university program for Hana, when she turns 18. However, they haven't taken advantage of an RESP account yet. In meeting with you, as their financial advisor, they got some valuable information regarding the RESP account. They haven't also had a TFSA account and are keeping all their savings of $92,000 in a joint high-interest savings account, which currently yields 0.55% of interest. Both Majid and Mina have been part of a defined benefit pension plan that guarantees 2% of the average of their best 5 years for each year of service, and have minimal (zero) RRSP room. They collectively make $120,000 per year ($60,000 each) and have $8,000 of surplus in their cash flow every year that can be saved and invested. You prepared investor's profiles for Majid and Mina and assessed their risk tolerance. Based on those two factors, you believe you could recommend an investment strategy that matches the clients profile and objectives and gives an annual return of 7% for their savings and investments. They have a mortgage of $250,000 with an annual interest rate of $2.49% for 5 years. They just renewed their mortgage.

After speaking with you and learning about TFSA and RESPs, here are a number of objectives Majid and Mina have set for themselves.

• They would like to come up with an optimum plan to take advantage of the government RESP grants. They are planning to contribute $60,000 of their savings towards Hana's education as soon as possible. They are asking if they should contribute a lump sum amount into Hana's RESP and let it grow in the account or contribute the amount gradually.
• Majid and Mina also ask if there is a more tax efficient way to save money.
• Their next priority after saving for Hana's education, is to make a retirement fund in addition to their pensions.

Requirements:

• Propose an optimum RESP strategy.
• If funds, contributions and government grants, are deposited into the RESP at the beginning of the year, how much money will there be in Hana's education fund 7 years from now?
• If retirement savings are deposited at the beginning of the year, how much money will there be in the retirement fund, 7 years from now?
• Does it make sense for Majid and Mina to pay down their mortgage with their savings?

Make a financial plan for Mina and Majid, based on the above requirements. Include any other suggestions that you have for them in case of their financial planning.

Due date: Friday, April 09. Late submissions are not accepted.

Assessment:

5% Presentation and clarity of the language

15% Content