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Course name: FPSC Approved Capstone Course

Submitted by: Akash Rana

Student number: 300913931

Assignment 1: Initial Submission-Financial Plan

Submitted to: Professor Elles Kyriacos


 Disclaimer

 Summary of Sam and Sara’s goals and needs

 Recommendation

 Personal information

 Cash flow

 Net worth

 Education Plan for Aaron

 Registered Disability Savings Plan for Philip

 Report

All the more vitally. All data gave in the attached report is general in nature and should NOT be translated as giving lawful. . please counsel your lawful. it is necessary for me to survey your financial plan related arrangement standard to solidly guarantee that information will be refreshed continually and address current needs appropriately. In the event that you have a particular enquiries and issues.Disclaimer- All the figures expressed in the joined report are determined by assumption and data provided by Sam and Sara Knight. These assumptions and data will be changed every year. it is also necessary to look at some different scenarios to get an idea of the impact of various assumptions on planning objectives. tax and bookkeeping counsellor. A portion of the information displayed depends on the current assessment of tax rules and legislation which might be liable to change. Thusly. bookkeeping and tax counsel.

500.  They need to save sufficient cash for paying expense for another child. Their Needs: -  Sam and Sara essential need is to get the guarantee regarding the disable kid name Philip to be financially secure throughout his life  Philip needs to utilize ASD intervention services and treatments outside schools that cost add up to $1. Philip for going to a school or exchange school for a two year since Philip has disable issue.  They need to spare adequate cash for paying Aaron's educational cost charges of four- year college program and some different costs like acquiring books and cost of occupant if Aaron decide to study far from home.200 with money related help from Ministry of Children and Family improvement (MCFD) up to $500 and his parent is paying the difference of $700 month to month. . every year cost generally $7. on account of disability issue so they need to guarantee that Philip can go to post-secondary school when he achieves 18. thereupon. Financial Goal’s for Sam and Sara are :-  The vital goals are to pay all the debts before taking a retirement  Sam needs to be without mortgage ten years from today.000 every year from now until the point when they retired. they need to set aside supports around $15.  They realize that Philip will not be able to get the job or employment with low pay after graduated post-secondary school. At that point.

 3) Sam and Sara needs to maintain maximum RRSP and TFSA in order for lessor tax liability.  Both couple should get retire after 65 age in order to get debt free.  2)The second path is to make a spending that can be powerful to control cash and it might be helpful for the couple to deal with events of surprising issues. . restaurant. entertainment and club membership. for example vacations. Recommendation There are three positive procedures for Sam and Sara to do now  1)The main technique is to diminish some discretionary spending that are not clearly fundamental.

Personal information and financial assumptions Personal Information Personal First Name Sam Sara Last Name Knight Knight Birthdate January 4th January 4th Age 46 44 Marital Status Married Married Sin number Employer Crane Demolition Law Firm Service Ltd Occupation Mechanical engineer Lawyer Address Know your client Street 639 Gerrard Street Investment knowledge Minimum City Toronto Risk Tolerance Minimum Province Ontario .

Postcode M4M 1Y2 Country Canada Contact information Phone contact 647-968-8589 416-462-1359 Email Sknight@yahoo.  Sam has a perfect health condition and his gross pay $127.000 and he has changed the single ownership of the house to joint name with Sara. Sam contributes $700 to the organization's as defined contribution plan and his employer has to contribute same amount to his CPP . Consistently.000 Dependents First name Last name Birthdate Philip Knight 15 Aaron Knight 5 and half Wills Sam Sara Do you have a will Yes Yes  Sam has a house which esteemed at $700. Sam's employer offers Sam full medical and dental coverage for Sam's family and incapacity protection.

 There is an unsecured credit extension at a rate of 7% every year which they use to cover costs as required.5% and the minimum installment is $185 month to month.225 with yearly loan fee of 18. she has a child named Philip with her ex and he is 15 years of age and Philip is having disable issues which influences his individual's social connections. Consistently Sara needs to pay $480 with financing cost of 7. They are disappointed as they need to pay down the credit extension. the balance was $5. Sara has no cash or different resources. The organization just offers her about full medical and dental scope.000 in CSBs which will be utilized as a emergency.  $1.000 has been placed in a joint account of Sam and Sara which they use to store their salary and pay bills.  Sam and Sara is having a Visa balance of $7.000. they figure out how to make installment of about $85 to cover the interest charge. interests and conduct. with two years remaining and 7% of advance on yearly loan rate.  Sara's gross salary of $100.5% every year and the credit that Sara is hoping to pay off in five years.259.  Sara has an exceptional balance of $24. the present balance is $14.  An RRSP loan of $15. Every month.000 amortized over $6.000 every year. Sara has collected about $25. correspondence. A year ago. .600 is the present balance amount and Sara is paying $300 month to month.000 as student loan that she has obtained from the credit association before she met Sam. vacations and sick days however no other advantages.

she has a portfolio with arrived at the average rate of return of 1% every year finished the previous five years.  Both Sam and Sara have named each other as beneficiary on their RRSPs. the couple is intending to purchase new furniture and a huge screen HDTV with the adjust of $6. purchase leasing two cars at the same time. 40% fixed income and 55% equities . In any case. Besides. Because of having no understanding and information of investment. The yearly average rate of return for his RRSP holdings has been 3. She is clearly learned about commodities since she has been following a few commodities firms for quite a while. All things considered. consequently. The couple has two leases autos containing a BMW and a Lexus. In addition.  Both Sam and Sara have RRSP accounts while Sam's RRSP has an estimation of $89. she contributes $350 month to month to her RRSP. the previous expenses $750 every month and last expenses $750 month to month. accordingly. with the goal that it costs them a ton of cash on cost.5% over the past five years and Sam contributes $300 month to month on his arrangement  Sara has RRSP esteemed at $57.750 which is invested into three commodities. they are planning to lease as opposed to purchase since they can change another auto persistently without worrying over the issue of keeping up an aging vehicle. Their investor likewise profile for the couple has been resolved to be balance including 5% cash. a pension benefits design has not been offered to Sara. subsequently. Sam simply just put money into low risk Canadian bond funds. Presently the two leases are terminating.500.850 is expected in 6 month.

909 8.95% Maximum CPP 5.20 5.132 3.  Sam Sara YMPE 55.300 YBE 3.20 contribution CPP contribution annually 3.73 Retirement age 67 65 Number of months exceed 48 65 Additionl benefit 2.132 % of contribution 61% 61% Retirement pension (age 65) 8.980 and Sara had qualified for a yearly CPP retirement benefit of $2.300 55.165.500 CPP contribution rate 4.050.500 3.744 Expected retirement 10.128. Sam had met all requirements for a yearly CPP retirement benefit of $4.165.128.  Last December.95% 4.166 pension in today’s dollars .73 8.

PMT = 0  CPT FV = 12. PMT = 0  CPT FV = 16.377(Sara) ( All the calculations made above are made by keeping in mind that they will retire after 65 years of age as they want to live a debt free life after retirement ) . Pension in retirement's 16.500) x 4.128.909 (Sam) Expected retirement pension in today’s dollars: 8.165.300-3.73 = 10.534 12.17 x 12 months) x 61% = 8155.909. PV = 10. PV = 8.165.744 Expected retirement pension in today’s dollars: 2.128. N = 21.20 Percentage of contribution: 3.63.534 (Sam) Pension in retirement’s dollars: I/Y = 2%.20 = 61% Retirement pension at age 65: (1114.132/5.377 dollars Working note: Maximum CPP contribution: [(55.73 = 2. N = 21.165.73 Additional benefit: [100% + (48 x 7%)]*8.63 (Sara) Pension in retirement’s dollars: I/Y = 2%.165.95%] x 2 = 5.744 + 8.

350 Total Saving 16.840 Net Worth 696.500 100% .Financial Management Plan Summary Net Worth Cash Flow Total asset 1.231 Net Cash Flow 15.060 Total Debt Payments 62.001.250 Family income 114.019) Total expenses 99.800 Current surplus/deficit (9805) Cash Flow Summary Family income (before tax) 227.900 (after tax) Liabilities (305.

800 100% expenses Discretionary expenses .2% insurance and utilities Heating oil 2.62% Expenses Household expenses. 14.54% Property taxes 4.38% Family income (after tax) 210.31% insurance Clothing 4.39% Car leases 18.600 5.800 7.55% Car maintenance and 3.000 26.800 7.19% Total non-discretionary 67.400 12.400 12.Taxable income 16.1% House maintenance 3.39% Special education – Philip 8.200 6.400 21.400 3.700 92.600 5.31% Groceries 8.

73% Total Discretionary 32.040 100% expenses Total expenses 99.Vacations 6.000 18.000 18.840 43.99% Entertainment 6.73% Extra-curricular activities 3.1% Summer camp 6.000 9.4% Theatre subscription 960 2.080 3.000 18.73% Club membership 1.37% Restaurants 9.000 28.9% .

040 on vacations. The couple has spent huge . summer camp. 9. insurance.99% 3. for example household. 2. 18. insurance and utilities Heating oil Property taxes House maintenance Groceries Special education – Philip Car leases Car maintenance and insurance Clothing Both has spent $67.800 for non-discretionary costs. the couple spend expansive sum on basic needs like grocery and household expenses costs which are 27% and 21% individually DISCRETIONARY EXPENSES Entertainment. Summer Camp.73% Vacations. Based on data. club membership. 28.40% Restaurants.73% As per the pie chart of Discretionary couple has spent around $32. Subscription. heating oil. restaurants.10% 18. 18. and special expenses of education for their oldest child Philip.37% Extra-Curricular activities .73% theatre Club membership. theatre and entertainment. groceries. Non-Discretionary expenses 5% 6% 21% 27% 4% 12% 13% 7% 5% Household expenses.

74 As per assumption mentioned above. Sam and Sara are planning to save sufficient money for Aaron when he got 18 years old. Assume that they can reduce discretionary expenses from $32.782. therefore. Instead of spending huge amount on vacations and summer camp. restaurants (28.040 to $15.amount on vacations (18. Working note: PV = 17. N = 17. nephews. The beneficiaries are not only available for children. if the couple can save $17.040 per year up to they retire at 63. They can invest that amount on their kids planning for the better lifestyle. they do not need to worry that their beneficiaries have not sufficient fund for study. I/Y = 2%. the subscriber will make contribution (educational assistance payment-EAPs) annually for beneficiaries’ education in the future. it is also acceptable for grandchildren.1%).040 annually.040.74. The tuition fees and books are expectedly estimated $10. thus. CPT FV $280.782. and entertainment (18.000 yearly and it takes four years to . they can save the money and start investing on RESPs and RDSPs which will be give the benefit on their financial planning.73%). RESPs is one of the most popular savings plans for many families and the reason for using this saving plan because it can help subscriber’s beneficiaries can access post-secondary school after the subscribers retire. they can save $17.73%). or family friends. Education Plan for Aaron – Registered Education Savings Plan (Commission. 2017) Cited that Registered Education Savings Plan (RESP) is known as a contract between the subscriber and the promoter. nieces. they can accumulate total $280. summer camp (18. Under the contract.000.73%) which is big concern and can be reduce easily.

Working note: Step 1: PV = $10.280. the amount is increasing to $88.45 due to inflation rate.45.000 PMT = 0. Thus. . there are four steps to calculate future value that the couple has to pay for Aaron’ education tuition fees when he got 18 years old. $13296. inflation rate = 7%. PMT = 0.280.000 and pay that amount in the future.73% computed by (3%-7%)/ (1+7%) 3.85 is the difference between $10. N = 4  CPT PV = 88.85 due to inflation. Nevertheless. they need to do the following steps. notwithstanding.7 In order to accumulate $88280.000 in total for Aaron’s education.000 is the initial amount that the couple has expected to save.296.000 and 23.73% is the new rate that calculated by using expected rate of return and inflation rate which will be used to compute future value of Aaron’s education tuition fees for total four years.009. N = 12.85.45 $40. Step 3: FV= 0. PMT = -23296. in order to know the proper amount that the couple has to save.45. the couple is trying to save $40.5  CPT FV = $23.296.46 is the difference that the couple has to pay more.73%. Generally. N = 12. inflation rate = 7% so that rate will be 3.296.complete the program.009.85 $23. Step 4: FV = 88280. the inflation rate (7%) is one of the problem that the couple is concerning because they cannot save accurate $40.7.5  CPT PV = 61.280.85 is the amount that the couple has to pay in one year for Aaron’s education. I/Y = 3. $48. Step 2: expected rate of return = 3%. I/Y = 3%. therefore. the couple has to have present value 61.

in order to let Philip. Assume that when Sam and Sara have retired. he will face difficulties in finding job. Working note: Step 1: Assume that I/Y = 5%. so that present value will be $203. They expect to accumulate an amount that will provide at least $15. A major advance of the RDSP is that the assets can be supplemented with Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Bonds (CDSBs) for recipients who are under 50 years of age. . N = 25 (90-65) and PMT = $15.  The RDSP is saving plan which individuals can add to after tax. and their expectation is that Philip can get $15.000 annually. thence.Financial security plan for Philip  Registered Disability Savings Plan (RDSP) is known as a new savings program that created by the Federal Government to motivate and support Canadian disable people and their families to save for long term financial needs in a tax deferred environment.000 annually. so that Sam and Sara will be eligible for an RDSP holder. receive $15.255.000. the couple wants to set aside funds for Philip yearly until they retire.  Sam and Sara are worrying that after Philip completed post-secondary education. To open an RDSP. There are three steps to calculate payment that the couple has to pay from now until they retire.000 every year. people must be disable who is of the age of majority and has the legal capacity to manage their finances. with profit and development gathering tax-deferred. or doing a job with very low income. Philip is only 15 years.

If either one prematurely die. the present value of $15. The only tax that they need to pay is when they make withdrawals. desired retirement age.255. the couple also need to concern about the tax planning.771 From now. Old Age Security and Guaranteed Income Supplement.  For tax planning. and estate planning. (Institution. Disability Benefits.Step 2: expected rate of return = 3%. risk management. and expectation of lifestyle expenses. the couple has to accumulate $15. PV = $203. opening RDSP that will not affect other disability benefits like Canada Pension Plan.255. RESPs and RDSPs. to know the client’s expectation toward income in retirement.73%.000 will be $203. 2017) Stated that Registered Disability Savings Plan has a lot of benefits for Knight’s family because the income that the couple earn on savings in an RDSP is tax deferred. retirement planning.771 annually with the assumption 5% of interest rate. Step 3: I/Y= 3. More importantly. Furthermore. either Sam or Sara can put money on RDSP without worrying the restriction of the plan. N = 17  CPT PMT = $15. inflation rate = 7% so that the rate will be computed as (3%-7%)/ (1+7%) = 3. the survivor spouse can continue to contribute for their kids. to know the current and projected marginal tax rates over working and retirement years.  For retirement planning.73%. . they do not need to pay tax on the money that they have contributed. anyone can make contributions to RDSP. Plan for the remainder of the Report After calculating CPP.

or how they can pay off mortgage earlier than they expected. P. R. O. About the Registered Disability Savings Plan. (2017).  For risk management.rdsp. Commission.getsmarteraboutmoney. or in the event of disability. Retrieved from RDSP Plan Institution: http://www. (2017).com/what-is-it/ .  For estate planning. Institution. projected income and expenses in the event of one spouse dies prematurely. to know the couple’s life expectancy. Retrieved from Ontario Securities Commission: https://www. to know that the will of the couple to transfer the house to their kids. How RESPs work. Reference.