You are an experienced personal financial planner working in Oshawa, Ontario. On November 15, 22, you met with your new clients, Claire and David Johnston.

Below is a summary of your notes from the meeting.

Claire and David Johnston have been married for 9 years and have a 7-year-old daughter named Maegan. Claire and David are both aged 36. Claire is pregnant and the Johnstons are expecting their second child in 4 months. They currently rent a small two-bedroom apartment for $1,900 per month.

David works as a manager for a robotics manufacturer and earns $110,000 gross annual income ($82,350 after payroll deductions of CPP, EI & tax). Claire works as a writer/editor for a local newspaper and earns $35,000 gross annual income ($29,500 after payroll deductions of CPP, EI & tax).

Two months ago, Claire received a tax-free inheritance from her late father in the amount of $200,000. Claire and David used $40,000 of the inheritance to each contribute $20,000 to their own RRSPs. The Johnstons do not make regular contributions to their RRSP accounts. They make RRSP contributions only when they have extra money at the end of the year. The remaining balance of the inheritance, $160,000, was deposited by Claire into a joint savings account (joint with David) at the local bank because they were unsure how to invest their money. The interest rate on this account is 1% per year.

David and Claire have disability insurance and health care insurance through their employers but neither has any life insurance.The Johnstons are starting to think more about their future with the aim of implementing their short-term and long-term goals and objectives.

For their immediate future they have decided they need a new car for David and would like to have something larger to transport their growing family. They would like to replace Davids car with a new Ford Bronco. Their maximum price range before all applicable taxes and fees is $50,000. They must decide if they wish to buy or lease the car.

Note: The brand and model of the vehicle they are purchasing doesnt really matter here; your recommendation is based on their finances, not their vehicle choice. Also, assume any vehicle they choose is in stock/readily available. The Johnstons would like to move into a large home. They are not sure if they have enough money for a down payment. They are looking at houses that cost $500,000. They would also consider renting a house if they can not afford to purchase one at this time. Your clients have asked you to help them determine if it is best for them to buy or rent a house.

The Johnstons want to have adequate life insurance. They have asked you to assess their current insurance situation.

Your clients want to ensure that their investment portfolios are appropriate to earn the maximum rate of return based on their acceptable risk level. They are expecting a minimum rate of return on their investments of 6%. However, they have indicated that they wish to remain conservative investors.

Claire and David wish to save for their childrens education fund for college or university. Assume th they will have 2 children to save for over the next 14 and 18 years.

Claire and David want to retire at age 65.

REQUIRED: Clients goals and objectives.

Based on the information above, provide a summary of the Johnstons short-term and long-term goals.

FINANCIAL MANAGEMENT (10 Marks)

Your Clients List of Assets, Liabilities, Income & Expenses

Asset/Liability	Amount	Rate of Return
Banking Chequing Account	$6500	0%
Joint Savings Account	$160,000	1%
Claires RRSP	$110,000	3%
Davids RRSP	$25,000	2%
Davids car (3 years old) value	$16,500	-
Claires car (1 year old) value	$33,500	-
Davids current car loan (at an interest rate of 10%)	$6,500
Claires car loan (at an interest rate of 13%)	$23,500
VISA credit card balance at 21% interest	$9,500
Expenditures in October 2022
Rent	$1,900/month
Non-discretionary living expenses (household expenses, food, clothing, etc.)	$1,500/month
Entertainment & restaurants	$1,000/month
Claires payment into her Employer Pension Plan	$400/month
Telephone, cable & internet	$250 / month
Car expenses for both cars (insurance, gas, etc.)	$180/ month
Claires car loan Payment	$625 / month
Davids car loan Payment	$400 / month

REQUIRED:

Use the information above to prepare a current Net Worth Statement and a current Cash Flow Statement for the Johnstons. Your personal financial statements for the clients should be presented in the same format as discussed in class