YU3541,Fall 2008, Chapter #2, Chapter 13 (299 to304)

YU3541,Fall 2008, Chapter #2, Chapter 13 (299 to304) -...

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Personal Financial Planning Lecture #2 Today’s Agenda Chapter #2-Time Value of Money Financing & Mortgages (How much home can you afford?). Pricing Bonds. Financial Planning Case-Preparing the Net Worth Statement and the Cash Flow Statement. Useful Finance Websites Homework Assignment for next week.
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Current Topics Review the Globe and Mail, National Post and other finance/investment-related sites. Also, for next class try some of the websites listed at the end of these lecture notes.
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Mid-Term Exam Saturday, October 18, 2008. Location: TBA
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Review of Last Week’s Topics 1. Financial planning is more than just retirement planning. It’s about setting up your goals (ST,MT, and LT) and then setting out a plan for achieving those goals. 2. The difference between desires and goals. 3. Two attributes of financial goals-measurable in 4. Six steps in the CFP’s Financial planning process. 5. Formal Model for Analysis. 6. The Family life cycle and financial priorities. 7. Financial Intermediations (types and purpose).
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Assignment Problems 1. Chapter #3, Problem #2 2. Chapter #6, Problem #4, parts b) & c).
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Chapter #3, Pr. #2, Solution FACTS: 10 years until retirement; (= N ) Current savings (present value) is $575,000; (= PV ) Goal is to have $1 million at retirement (Future value in 10 years); (= FV ) Rate of return on the GIC is 5% annually; (=I/YR ) QUESTION: How much must the client contribute each year (in addition to investing the current savings of $575,000) to ensure that he reaches his goal of $1 million in 10 years? ( What is PMT?)
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Chapter #6, Q.#4 b). Affects of Aging, “Baby Boomer” Population on the Financial Needs of Canadians. Key Considerations Pension costs to employees (private pensions, CPP, etc.) once baby boomers retire (increasing and/or changing from Defined Benefit to Defined Contribution). Changes to tax laws and other laws (i.e. RRSP/RRIF age, mandatory retirement age, etc.) . Changes to cash flow calculations (must account for increased number of years in retirement). Changes to health care costs (in Ontario (additional taxes) and outside Ontario when traveling).
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Chapter #6, Q.#4-Continued c). Key Financial Issues With Today’s Aging Population In Canada (See Page #128). Questions to Consider: What does the client base look like for most financial institutions today? What will the client base look like for most Canadian financial institutions in 20 years? Would the products offered be affected by changes in the spending patterns of a large portion of the population (i.e. from net savers to net spenders)
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Chapter #6, Q.#4.c.-Continued If the financial institution also sold insurance products, how might they change these products to better suit their client’s needs, and increase their sales? (i.e. Segregated funds, etc.) What about Seniors who are “asset rich, cash poor” when they retire? How could the financial institutions service these client’s better and, at the same time, make more money? (i.e. Reverse mortgages, etc.)
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This note was uploaded on 10/16/2011 for the course ADMS 3541 taught by Professor Staff during the Fall '10 term at York University.

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YU3541,Fall 2008, Chapter #2, Chapter 13 (299 to304) -...

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