Term Project - Personal Financial Plan Background: In this assignment you are to develop your own financial plan including addressing your real short, mid term and long term goals (including those in assignment 1, if you wish). The more relevant you make this for yourself, the more useful it will be to you. You will need to project (make an assumption about) your income after graduation and base your cash flow and financial plans on that basis. Make the plan and long term goals in today's dollars. See the posted examples. They are NOT perfect, but a good guideline. Written Plan: Your clear concise outline of your personal financial plan must include: Your major financial goals over the next few years as well as long term goals such as retirement considerations. Make clear specific plans on applicable areas such as career and income goals, home purchase, mortgage commitment, insurance plans, debt or credit issues, loan consolidation, investment portfolio, marital contract, wills, etc. Professionally laid out personal financial statements including cash flow, balance sheet, net worth and budget Professionally laid out projections about cash flow including saving, once you are working. Liquidity and credit management issues. Saving for major purchases, and paying off long term debt. Plans regarding protecting your wealth, such as life and disability insurance. Plans regarding savings, investment risk and asset allocation regarding your retirement savings. Assumptions on OAS, CPP and funding retirement, lifestyle and duration of retirement. Consider taxation of investments, retirement income and estate plans. 4 Deliverables for your financial plan: Submit on Blackboard as indicated in the Course Outline. 1. A short paragraph outlining your current situation. (School/work plans, live at home/independent, married etc.) 2. Your financial goals with relevant headings, written in SMART format (specific, measurable (numbers), attainable, relevant , and with timeframes). (Heading example: Purchase a second hand Honda Civic in three years.) When writing numbers, write out numbers under 10 such as, 'in three years'. 3. Your cash flow broken down into meaningful categories for your own situation. This must be done in Excel and pasted as a PICTURE into your Word or PDF document. Do NOT include pennies in financial statements. For your full financial plan it may be best to annualize your cash flow and capture milestone years, see the template included. Your balance sheet with net worth professionally laid out. This must be done in Excel and pasted into your Word or PDF document (see template). 5. Note that you must format your financial statements so that each one fits properly on one page. They cannot split across two pages. Make sure the headings are left justified and the numbers are right justified. Each sentence must be clear, concise and written in standard business English. This means no colloquialisms, erudite obscure words, malapropisms or syntax errors. (ie use clear, concise, straightforward English, using the correct words.) 7 Your report should include charts, graphs and other illustrations to illustrate your plans. Be clear and concise. A relevant picture or graph is worth a thousand words. He Use Excel to make projections of your income, expenses, assets and liabilities at key future dates (see ev example below). 9. Professional layout is important to make your plan clear. Do NOT include calculations in the plan (but make sure your numbers are correct). 10. Consistency throughout the plan is very important. For example, disposable income of $5,000 per month cannot fund various strategies that require $10,000 monthly cash flow. 11. MAXIMUM four written pages (illustrations not included). 12. Submit your report in one Word document online by the due date. 6. 8 Written Plan: Total 10 marks: Report: (see rubric for clarification on marking criteria.) Formatting, layout and clarity Clear, concise writing SMART goals and Financial Statements Relevant charts, tables and illustrations Coverage of planning issues 20% 20% 20% 20% 20% If you use sources other than your own calculations, you must cite them. Retirement Projections must use Real Rate of Return Assumptions Note that for your investment and retirement real rate of return assumptions you need to use the standard projection numbers of: Conservative investment portfolio: 1.25% Balanced investment portfolio: 2% Aggressive investment portfolio: 3% Tailor the template to YOUR PLAN Paste into your plan and write explanations. Include balance sheet at start of each milestone. This is only a partial illustration: ANNUAL CASH FLOW AT YOUR KEY MILESTONES Current (age 22 ?) 10,000 Career (Age 25 30?) 70,000 Home purchase (age?) 93,000 Retire Age 65 (example) ANNUAL INCOME Earned Income OAS estimate CPP estimate RRSP/Pension Other Income Annual Gross Income Tax/EI/CPP (est using table) Disposable Annual income 7,200 13,200 32,000 10,000 70,000 13,600 56,400 93,000 20,500 72,500 52,400 8,500 43,900 10,000 4,800 3,000 12,000 5,000 7,200 2,000 2.000 12,000 5,000 7,200 38,000 5,000 7,200 2,000 4,000 2.000 4,000 2,000 ANNUAL EXPENSES Rent/ mortgage, Ins, ptax Car expenses (incl ins) Groceries/living estimate Charity/ gifts Recreation/entertainment/travel Life + DI Insurance Cell, Internet, Utilities Emergency fund House/goals savings TFSA contributions RRSP contributions After tax expenses NET ANNUAL CASH FLOW 2,000 2,000 12,000 1.000 2,000 2,000 12,000 12,000 56,200 12,000 72,200 43,200 9,800 200 200 300 700 Term Project - Personal Financial Plan Background: In this assignment you are to develop your own financial plan including addressing your real short, mid term and long term goals (including those in assignment 1, if you wish). The more relevant you make this for yourself, the more useful it will be to you. You will need to project (make an assumption about) your income after graduation and base your cash flow and financial plans on that basis. Make the plan and long term goals in today's dollars. See the posted examples. They are NOT perfect, but a good guideline. Written Plan: Your clear concise outline of your personal financial plan must include: Your major financial goals over the next few years as well as long term goals such as retirement considerations. Make clear specific plans on applicable areas such as career and income goals, home purchase, mortgage commitment, insurance plans, debt or credit issues, loan consolidation, investment portfolio, marital contract, wills, etc. Professionally laid out personal financial statements including cash flow, balance sheet, net worth and budget Professionally laid out projections about cash flow including saving, once you are working. Liquidity and credit management issues. Saving for major purchases, and paying off long term debt. Plans regarding protecting your wealth, such as life and disability insurance. Plans regarding savings, investment risk and asset allocation regarding your retirement savings. Assumptions on OAS, CPP and funding retirement, lifestyle and duration of retirement. Consider taxation of investments, retirement income and estate plans. 4 Deliverables for your financial plan: Submit on Blackboard as indicated in the Course Outline. 1. A short paragraph outlining your current situation. (School/work plans, live at home/independent, married etc.) 2. Your financial goals with relevant headings, written in SMART format (specific, measurable (numbers), attainable, relevant , and with timeframes). (Heading example: Purchase a second hand Honda Civic in three years.) When writing numbers, write out numbers under 10 such as, 'in three years'. 3. Your cash flow broken down into meaningful categories for your own situation. This must be done in Excel and pasted as a PICTURE into your Word or PDF document. Do NOT include pennies in financial statements. For your full financial plan it may be best to annualize your cash flow and capture milestone years, see the template included. Your balance sheet with net worth professionally laid out. This must be done in Excel and pasted into your Word or PDF document (see template). 5. Note that you must format your financial statements so that each one fits properly on one page. They cannot split across two pages. Make sure the headings are left justified and the numbers are right justified. Each sentence must be clear, concise and written in standard business English. This means no colloquialisms, erudite obscure words, malapropisms or syntax errors. (ie use clear, concise, straightforward English, using the correct words.) 7 Your report should include charts, graphs and other illustrations to illustrate your plans. Be clear and concise. A relevant picture or graph is worth a thousand words. He Use Excel to make projections of your income, expenses, assets and liabilities at key future dates (see ev example below). 9. Professional layout is important to make your plan clear. Do NOT include calculations in the plan (but make sure your numbers are correct). 10. Consistency throughout the plan is very important. For example, disposable income of $5,000 per month cannot fund various strategies that require $10,000 monthly cash flow. 11. MAXIMUM four written pages (illustrations not included). 12. Submit your report in one Word document online by the due date. 6. 8 Written Plan: Total 10 marks: Report: (see rubric for clarification on marking criteria.) Formatting, layout and clarity Clear, concise writing SMART goals and Financial Statements Relevant charts, tables and illustrations Coverage of planning issues 20% 20% 20% 20% 20% If you use sources other than your own calculations, you must cite them. Retirement Projections must use Real Rate of Return Assumptions Note that for your investment and retirement real rate of return assumptions you need to use the standard projection numbers of: Conservative investment portfolio: 1.25% Balanced investment portfolio: 2% Aggressive investment portfolio: 3% Tailor the template to YOUR PLAN Paste into your plan and write explanations. Include balance sheet at start of each milestone. This is only a partial illustration: ANNUAL CASH FLOW AT YOUR KEY MILESTONES Current (age 22 ?) 10,000 Career (Age 25 30?) 70,000 Home purchase (age?) 93,000 Retire Age 65 (example) ANNUAL INCOME Earned Income OAS estimate CPP estimate RRSP/Pension Other Income Annual Gross Income Tax/EI/CPP (est using table) Disposable Annual income 7,200 13,200 32,000 10,000 70,000 13,600 56,400 93,000 20,500 72,500 52,400 8,500 43,900 10,000 4,800 3,000 12,000 5,000 7,200 2,000 2.000 12,000 5,000 7,200 38,000 5,000 7,200 2,000 4,000 2.000 4,000 2,000 ANNUAL EXPENSES Rent/ mortgage, Ins, ptax Car expenses (incl ins) Groceries/living estimate Charity/ gifts Recreation/entertainment/travel Life + DI Insurance Cell, Internet, Utilities Emergency fund House/goals savings TFSA contributions RRSP contributions After tax expenses NET ANNUAL CASH FLOW 2,000 2,000 12,000 1.000 2,000 2,000 12,000 12,000 56,200 12,000 72,200 43,200 9,800 200 200 300 700