Himani

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Humber College *

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Course

4012

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Finance

Date

Jan 9, 2024

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1 ADVANCED FINANCIAL PLANNING ASSIGNMENT Centre for Business School of Accounting & Finance Advance Financial Planning FIN4012 Academic Year: 2023-2024 Submitted by: Himani Bhatt 101433041 Dhwnil mehta 101391491 Ci Qu. 101391491 TABLE OF CONTENTS

2 Sr.No CONTENTS Page No. 1. Client Profile Assumptions 2 2. Cover Letter 3 3. Client’s Goals, Needs, and Priorities 4 4. Client’s Present Financial Situation ➢ Statement of financial position ➢ Statement of Cash Flow 5 5. Financial Management 6 6. Income Tax Planning 7 7. Risk Management 8 8. Asset Management 9 9. Retirement Planning 10 10. Estate Planning 11 11. Overall Impact of Financial Planning 13 CLIENT PROFILE James and Ashley Keigly are a young couple in their early thirties who recently entered the rewarding journey of parenthood with the birth of their daughter, Colleen. James is an accomplished contractor, specializing in carpentry, painting, plumbing, and electrical work, while Ashley is a dedicated full-time professor at a reputable local college, imparting knowledge in the fields of English and professional communications. They both come from second-generation Canadian families, deeply rooted in their vibrant Irish heritage, and actively participate in their ethnic community. James consistently earns an annual income ranging between $115,000 and $125,000, with a notable peak of $155,000 last year due to increased demand. Ashley enjoys a stable income of $64,000 per year as a professor and supplements her earnings by providing piano lessons, which contribute an additional $1,000 per month. Currently residing in a rented basement apartment for $1,000 per month, including utilities, they possess a combined net worth of $95,000, comprising liquid assets totaling $14,000, investment assets amounting to $74,000, and personal use assets valued at $34,000. Alongside their assets, they manage certain financial obligations, including a student loan balance of $25,000 and a credit card debt of $2,000. Their primary objectives encompass two key aspirations: first, acquiring homeownership by investing

3 in a $675,000 residence within a new development near Ashley's workplace; second, diligently accumulating $100,000 for each of their two children's post-secondary education. In light of their growing family, they recognize the critical importance of life insurance coverage to provide financial security in the unfortunate event of premature death. Adhering to a conservative risk profile, they prioritize liquidity and seek the guidance of a comprehensive financial plan that aligns with their ambitions while ensuring a harmonious work-life balance. ASSUMPTIONS The financial planning assumptions presented herein adhere to established industry standards and best practices. However, it is essential to emphasize that all future projections are estimates and may be subject to change due to various factors, including economic fluctuations and policy modifications. For the sake of simplicity, inflation has not been factored into the estimates. These assumptions serve as a foundational basis for creating a comprehensive financial plan for James and Ashley Keigly's family, while acknowledging that individual circumstances and market conditions may necessitate adjustments in the future. COVER LETTER I want to express my gratitude for the opportunity to work with you and develop a comprehensive financial plan that caters to your unique circumstances and future aspirations. The plan I have crafted takes into account the exciting news of your growing family and is designed to guide you through the various stages of your life, ensuring financial security and peace of mind. One of the key aspects of the plan is to assist you in achieving your goal of homeownership. We will assess your eligibility for a mortgage and explore options such as the Home Buyer's Plan, RRSP contributions, and the new First Home Savings Account (FHSA). These strategies will help you make the most of your finances and move closer to owning the home you desire. Additionally, we will focus on education savings for your children. By considering investment opportunities like Registered Education Savings Plans (RESPs) and Tax-Free Savings Accounts (TFSAs), we aim to maximize your returns and accumulate sufficient funds to support your children's future educational endeavors. Insurance plays a crucial role in protecting your family's financial well-being. We will conduct a comprehensive analysis of your existing life insurance coverage and recommend suitable options to ensure your family is adequately protected. Furthermore, we will explore the benefits of mortgage life insurance and the advantages offered by Canada Mortgage and Housing Corporation (CMHC) insurance. To optimize your investment portfolio, we will consider your risk tolerance and propose adjustments that strike a balance between growth potential and security. Our objective is to help you achieve optimal returns while mitigating potential risks. Debt management is another critical aspect of the plan. We will develop a strategy to manage and reduce your outstanding debt efficiently, enabling you to accelerate your path to financial freedom and reduce interest costs. Tax planning strategies will be implemented to minimize your tax liability and take advantage of deductions and credits associated with Ashley's business income and childcare expenses. By leveraging tax-efficient strategies, we aim to optimize your overall financial position. Retirement planning is important, even with your primary focus on education savings. We will evaluate your retirement assets, including Ashley's defined benefit pension plan, and provide projections to ensure a secure retirement. Our goal is to help you achieve a retirement lifestyle that aligns with your preferences and allows you to enjoy quality time with your family and community.

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4 Finally, we will review your wills, guardianship arrangements, and powers of attorney to ensure that your estate planning needs are properly addressed. It is essential to have a comprehensive plan in place to protect your family's interests and provide clarity for the future. Regarding fees, I operate on a flat fee structure that encompasses all aspects of the financial planning process. This fee covers the development of the financial plan and ongoing support and guidance as you implement the recommendations. Additionally, I am pleased to provide referrals to trusted professionals who can assist with specific needs, such as mortgage brokers or insurance agents. Considering Ashley's pregnancy, I understand that adjustments may be necessary in the plan. Rest assured that I will take these factors into account as I finalize the details, ensuring that the plan remains relevant and supportive of your evolving circumstances. I kindly request your availability for a follow-up meeting, during which I will present the financial plan in detail, address any questions or concerns you may have, and discuss the next steps in implementing the recommendations. Please let me know your preferred date and time, and I will make the necessary arrangements accordingly. Thank you for placing your trust in me to safeguard your financial well-being. I am genuinely excited about working with you and helping you achieve your financial goals. Should you have any further inquiries or require additional information, please do not hesitate to contact me. CLIENT’S GOALS, NEEDS, AND PRIORITIES James and Ashley Keigly have the following financial goals and needs: • Homeownership: They aim to purchase a residential property in a new development near Ashley's workplace, considering their income and expenses. • Education Savings: They want to invest funds for their daughter Colleen's future education, exploring options like Registered Education Savings Plans (RESPs) and Tax-Free Savings Accounts (TFSAs). • Investment Review: They seek guidance on reviewing and optimizing their investment portfolio to align with their long-term financial goals. • Risk Management: They want to ensure adequate life insurance coverage for both individuals and explore disa- bility insurance options. • Debt Management: They seek strategies to effectively manage their student loan and credit card debt. • Tax Planning: They are interested in tax-saving strategies to optimize their income and deductions. • Estate Planning: They would benefit from advice on establishing wills and considering estate planning tools for their growing family and assets. CLIENT’S PRESENT FINANCIAL STATEMENT

5 SAVINGS RATIO = 𝐴????? ?𝐴??? ?𝐴?? ????? ??????? ????? ?????? = 50000+24000+24502 125000+76000 = 49% EMERGENCY FUND = ???𝐴? ?????? 𝐴????? ???𝐴? ??????? ???????? = 14000 13653 = 1.02 The savings ratio of 49% signifies that you are diligently setting aside a substantial portion of your monthly gross income, surpassing the recommended 10% savings threshold. Your savings encompass contributions towards your RRSP, TFSA, and the surplus derived from your cash flow. With a commendable surplus at hand, it is prudent to explore investment avenues that align with your risk tolerance and objectives. By doing so, you can potentially foster the growth of your financial assets and safeguard their value over the long term. The Emergency Fund ratio of 1.02 indicates that your liquid assets are just about sufficient to cover one month's worth of expenses. While it is a positive sign that you have some level of emergency savings in place, it is advisable to strive for a higher ratio to provide a more robust financial safety net. By focusing on reducing discretionary expenses and directing additional funds towards your emergency savings, you can enhance your ability to handle unforeseen circumstances and maintain financial stability in the face of unexpected events. Overall, your cash flow surplus, just one-month coverable emergency fund, and high savings ratio show that you may not have enough money set aside to cover unexpected expenses while you're making progress toward your long-term savings goals. It's important to strike a balance between saving for the future and preparing for unexpected events. FINANCIAL MANAGEMENT Mortgage Qualification Amount

6 Combined gross income =155000/12 + 12000/12 + 21333/4 $19,250 GDSR (32%) = 19250 x 32% $6,160 TDSR (40%) = 19250 x 40% $7,700 Maximum payment towards Mortgage = Monthy (i) GDSR – Rent = $6,160 - $1,000 $5,160 (ii) TDSR - Rent - Student debt payment - Credit card payment = $7,700 - $1,000 - $112.50 - $50 $6,537.50 GDSR is the more restrictive ratio. It limits the maximum mortgage payment to $5,160/month. Using the Time Value of Money, Calculator functions [End mode] N 25 x 12 = 300 p/y 12 c/y 2 I/Y 4.3 PMT 5160 FV 0 CPT PV 951,311.66 However, you only require $675,000 for your dream house. For you to qualify for a conventional mortgage, the minimum down payment should be at least 20% of the lending value. (Loan-to-value criterion) = 675000 80% - 675,000 = $168,750 The current cash flow surplus and liquid assets are not sufficient to meet the down payment requirement. You can choose to wait a few months and save money for the down payment by reducing certain expenses. Alternatively, you are able to get a non-conventional mortgage with Canada Mortgage and Housing Corporation (CMHC). 5% down payment Upto $500,000 = 5% x 500000 $25,000 10% down payment $500,000 - $1,000,000 = 10% x 175000 $17,500 Total Down Payment required $42,500 LTV Ratio = 675000−42500 675000 x 100 = 93.70% Because your down payment would be under 20% of the purchase price, you will need mortgage insurance at a premium of 4%. Down payment $42,500 Mortgage required = 675000 - 42500 $632,500 Premium on Mortgage loan = 4% x 632500 $25,300 :. Total mortgage loan required = 632500 + 25300 $657,800 N 25 x 12 = 300 p/y 12 (as per assumption guidness) = Maximum mortgage amount

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7 c/y 2 I/Y 4.3 PV 657,800 FV 0 CPT PMT $3,567.96 Assumptions: i. The interest rate is fixed over the entire amortization period. ii. The mortgage insurance premium can be paid as a lump sum or added to the mortgage. We have added it to the mortgage. INCOME TAX PLANNING As per the data provided, we understand that James gross income is $125,000, while Ashley has an employment income of $64,000 and a business income of $12,000. Based on this, James Marginal Tax Rate is 36% and his Average Tax Rate is 28.11%; and Ashley’s MTR is 30.50% and her ATR is 25.47% [for the province of Alberta.] Automobile Lease Tax Treatment Ashley, you are using your personal car for business use (for piano classes). Currently, the mileage on your vehicle is very low, which is an average of 15,000 km per year, and you have used the car for business 20% of the time. Total kilometers driven: $15,000, Kilometres driven to earn business income: 20% Expenses: Lease = $3,600, Insurance = $1,080, Gas and operating expenses = $1,600 Total expenses on the car = $6,280 Ashley can deduct for the car for the tax year as follows: 20% x $6,280 = $1,256 The maximum leasing amount you can deduct per year is $9,600 and yours is $3,600, which is okay for now. We also see that you are planning to lease a bigger vehicle soon, and we suggest going with an automobile with a leasing cost under $9,600 per year, so the full amount can still be deductible. Further, once you buy a new house in the future, you can deduct your heat, electricity, maintenance, property taxes, and insurance amount of your house for tax purposes. In case you conduct any work related to your business from your house, we suggest operating in separate spaces because this can also be used as a tax deduction. = Total Mortgage loan required = Monthly payment amount

8 Non-refundable tax credits James and Ashley are also eligible for a few non-refundable tax credits. Non-refundable tax credits reduce your federal tax payable amount. You are eligible for the following tax credits: • Basic Amount: They are eligible for a basic credit of $13,808. This will be calculated as 15% (which is the lowest federal tax bracket) of your taxable income. • First- time home buyer’s credit: Individuals who acquire a qualifying home for the first time can claim a credit of 15% on up to $5,000 for a maximum credit of $750. To claim the credit the individual and his or her spouse cannot have owned a home in the past four years. • CPP and EI: Taxpayers can claim a tax credit of 15% of their maximum allowable CPP and EI contributions in any year. This will further reduce your income. Note; Tax saving strategies and tax treatments are listed alongside each section financial planning below. Risk Management • A risk management plan for James and Ashley's family should address their various financial risks and provide strategies to mitigate those risks. Here are some key areas to consider in their risk management plan: • Life Insurance: It is essential for both James and Ashley to have life insurance coverage to protect their family in the event of premature death. The coverage amount should be sufficient to cover their outstanding debts, such as the mortgage, and provide income replacement for the surviving spouse. Term life insurance is typically a cost- effective option for young families. • Disability Insurance: James should consider obtaining disability insurance to protect his income in case he be- comes unable to work due to injury or illness. This coverage will provide a portion of his income during a disabil- ity and ensure financial stability for the family. • Health Insurance: While Ashley has health insurance coverage through her employer, they should review the spe- cifics of the plan to ensure it adequately meets their needs. They should also consider obtaining health insurance coverage for James and their children if necessary. • Emergency Fund: Building an emergency fund is crucial to provide a financial safety net in the event of unex- pected expenses, such as medical emergencies, home repairs, or job loss. Aim for at least three to six months' worth of living expenses in a liquid savings account. • Property and Liability Insurance: Once James and Ashley become homeowners, they should secure appropriate homeowners' insurance to protect their property from damages or loss. They should also consider personal liabil- ity insurance to safeguard against potential legal claims. • Education Savings: As they plan for their children's education, they should consider the risks associated with po- tential changes in educational costs. Reviewing investment options within RESPs and other investment vehicles can help optimize returns and mitigate inflation risks. With the expenses increase, it might be hard for then to get extra room for RESP : Food: $9,000 - Cost of groceries and dining expenses for the family. Clothing: $3,600 - Expenses related to purchasing clothing for the family. Personal Care: $2,900 - Expenses for personal grooming, hygiene products, and healthcare items. • Risk Review and Adjustment: Regularly review their risk management plan and make adjustments as necessary. As their family and financial situation evolves, their risk profile and insurance needs may change. • It's essential for James and Ashley to work closely with a qualified financial planner or advisor who can assess their specific circumstances and provide tailored recommendations for their risk management plan.

9 Asset Management Plan The family asset status quo is as follows Liquid Assets: Joint Savings Account: $3,000 Canada Savings Bonds: $5,000 Savings account (Colleen): $6,000 Total Liquid Assets: $14,000 Investment Assets: TFSA: $50,000 Registered Assets: $24,000 Total Investment Assets: $74,000 Personal Use Assets: Automobile: $10,000 Personal effects: $4,000 Art: $20,000 Total Personal Use Assets: $34,000 Total Assets: $122,000 Liabilities: Student Debt: $25,000 Credit Card: $2,000 Total Liabilities: $27,000 Net Worth: $95,000 • An asset management plan for James and Ashley's family involves strategies to effectively manage and grow their financial assets. Here are some key components to consider in their asset management plan: • Budgeting and Cash Flow Management: Develop a comprehensive budget that includes income, expenses, sav- ings, and debt repayment. Track their monthly cash flow to ensure they are living within their means and have a surplus to allocate towards savings and investments. • Diversification: Ensure proper diversification by spreading investments across different asset classes. This helps reduce risk and potentially enhance returns. Given their conservative nature, they may consider a mix of stocks, bonds, and other assets that align with their risk tolerance.

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10 • Liquid Assets: The liquid assets, such as the joint savings account, Canada Savings Bonds, and the savings ac- count for Colleen, are generally low-risk and easily accessible. These funds can be kept in relatively safe and liq- uid investments, such as high-yield savings accounts or short-term bonds. • Investment Assets: The TFSA and registered assets present an opportunity for growth. Given their risk tolerance, a balanced approach with a mix of equities and fixed-income investments may be suitable. They can consider mu- tual funds, index funds, or exchange-traded funds (ETFs) that provide broad market exposure. • Personal Use Assets: Personal use assets, including the automobile, personal effects, and art, are not typically con- sidered investment assets. They hold personal value and should be evaluated separately from the investment port- folio. • It's important for James and Ashley to work with a qualified financial planner or advisor who can assist them in developing an asset management plan tailored to their specific financial situation and goals. Retirement Planning • Given James and Ashley's current focus on education savings, their retirement plan can be structured to align with their priorities. Here's an outline of their retirement plan: • Retirement Goals: Determine their desired retirement age and the lifestyle they envision during retirement. Con- sider factors such as travel, hobbies, and healthcare expenses. • Retirement Income Sources: Identify potential sources of retirement income, including Ashley's defined benefit pension plan, government pension plans (e.g., Canada Pension Plan and Old Age Security), and personal savings. Estimate the income these sources will provide during retirement. • Retirement Savings: While education savings are a priority, allocate a portion of their savings towards retirement. Set a target retirement savings amount based on their desired retirement lifestyle and the income gap not covered by other sources. • Retirement Accounts: Maximize contributions to tax-advantaged retirement accounts such as RRSPs and take ad- vantage of any employer-matching programs. Regularly review and adjust contributions as their income allows. • Investment Strategy: Develop an investment strategy for their retirement savings that aligns with their risk toler- ance and time horizon. Consider a diversified portfolio of investments, including stocks, bonds, and other asset classes. Regularly review and rebalance the portfolio based on their risk profile and market conditions. • Regular Monitoring and Adjustments: Monitor the progress of their retirement savings and make adjustments as needed. Regularly review their retirement plan to ensure it remains on track and make any necessary changes to their contributions or investment strategy. • Health and Long-Term Care: Consider the potential costs of healthcare and long-term care in retirement. Explore options for health insurance, long-term care insurance, or other strategies to mitigate these expenses. • Continual Review: Continuously reassess their retirement plan as their financial situation and goals evolve. Regu- larly consult with a financial planner or advisor to ensure their plan remains aligned with their objectives. While education savings are currently a priority, it's important for James and Ashley to periodically reassess their retirement goals and make adjustments accordingly. As their income increases and education savings are on track, they can allocate more resources towards retirement savings. Working with a financial planner will help them navigate these decisions and create a robust retirement plan. ESTATE PLANNING

11 Your will would require changes to cover important aspects missing from your will. It is suggested you go to a lawyer and codicil the Will. The suggestions for the wills are given below. You can take all these suggestions or pick and choose based on your interests. Firstly, they need to revise their wills to include the appointment of guardians for their children, specifying who would be responsible for their upbringing in the event of their untimely passing. Secondly, establishing trusts for their children's inheritance is advisable. These trusts would be managed by a trustee until the children reach a certain age or milestone, ensuring that the assets are protected and used appro- priately for their benefit. Re-evaluate Executor for Will You should re-evaluate if the current executor, Ash ley’s sister, still fits the role or if you need to change it. The executor needs to have good knowledge about asset management, be financially stable, and care about the deceased wishes. It is also possible to name more than one executor in Canada (i.e., co-executors). Assigning more than one executor may help in fulfilling duties more efficiently to your benefit, but it may also bring challenges in making decisions. Power of Attorney Power of attorney is a legal document that grants an individual the authority to act on behalf of the principle in specific situations. In Canada, there are several advantages and disadvantages associated with power of attorney. Advantages: i. POA can be customized to satisfy specific needs for you and can be tailored to cover a wide range of situations and decisions. ii. Power of attorney allows the principal to appoint someone you trust to manage their affairs without needing court involvement. iii. POA provides a mechanism for your affairs to be managed in the event of your incapacity or absence. iv. POA allows the principal to retain a certain degree of control over their affairs, as they can specify the powers and limitations of the agent's authority. Disadvantages: i. POA can potentially be abused by agents who may act against the principal's best interests. ii. Once power of attorney is granted, it can be difficult to revoke, particularly if you become incapacitated or are unable to communicate your wishes. iii. The legal requirements for creating and executing power of attorney can be complex. It is suggested to obtain legal advice from a lawyer to ensure that the document is valid and enforceable. iv. In some cases, POA may not be adequate to fully address your needs and concerns. Someone trustworthy should be named as your POA as they will be responsible for your personal care and assets. You can each name your spouse as your POA. It is better to give the other spouse a continuing POA so that if the person cannot take the decision, the other person can take the decision on their behalf. A continuing POA can use assets even while the donor is alive. You can give the POAs instructions on how you want your decisions to be made during your absence. You should also name someone as your POA for personal care. You need to keep in mind that the POA has to be mentally capable and 18 years old for assets and 16 years old for personal care. Final Arrangements and Paying Debts You can mention how you want your funeral and other arrangements to be. You also need to mention your loans and lenders. You do not have any big loans, so you can pay for your debts if there is any unusual death. On the other hand, Ashley’s student loan will dissolve if she dies before paying it. However, with time, you need to re -evaluate your debts

12 and liquidity to check if you still can pay them. Once you buy the house, it will increase your expenses, which can increase your debt payments. Naming Beneficiaries for Will You should name the beneficiaries for every asset. A may have to modify your will from time to time if there any big changes in your life affecting it, for example, a newborn baby or if the 22 beneficiary dies before the testator. Also, if the primary beneficiary dies, there should be contingent beneficiaries who will be the next ones in line. You need to choose between revocable and irrevocable beneficiaries. A revocable beneficiary is one whose designation as a beneficiary can be changed or revoked by the account owner or policyholder at any time. On the other hand, an irrevocable beneficiary is one whose designation cannot be changed or revoked without their consent. To Avoid Probate Probate involves confirming the validity of the Will, identifying, and valuing the deceased's assets, paying any outstanding debts and taxes, and distributing the remaining assets to the beneficiaries. To avoid probate you can use several strategies, depending on your circumstances: 1. Assets can be held jointly with another person, such as your spouse or your daughter Collen. When one of the joint owners dies, the assets automatically pass to the surviving owner without going through probate. 2. Certain assets, such as life insurance policies, retirement accounts, and particular investment accounts can pass directly to the designated beneficiary without going through probate. Hence, You can name each other and Collen as named beneficiaries for registered accounts. 3. A trust is a legal arrangement where the trust creator transfers assets to a trustee to manage for the benefit of the trust beneficiaries. There are usually two kinds of trusts: Living trusts take effect during your lifetime, while testamentary trusts are created in your Will and take effect at your death. With a revocable living trust, the creator can retain control over the assets during their lifetime, and after death, the support can pass to the beneficiaries without going through probate. So, You can make a trust for the TFSA account which will be used for Collen’s education and also for second child which will help them to get the amount timely when you are gone. 4. Another option is to gift assets during one's lifetime. However, it is important to note that gifting assets can have tax implications. For example, if any of you give money to your spouse or daughter (minor), and the other person uses that money to invest then the gift giver will be taxed on the income related to it and you will be taxed on that amount. Tax Implications on Estate In Canada, when someone passes away, their estate becomes subject to taxes depending on various factors. If the estate includes assets such as real estate, stocks, or other investments, any increase in the value since the time of acquiring, will be subject to capital gains tax. The capital gains tax is calculated based on the fair market value of the asset at the time of the deceased's death. It's important to note that the deceased portion of the house, RRSP or any registered accounts will be subject to tax if there is any capital gain. For spouse the tax will be eliminated because of spousal rollover. The assets can be held as joint ownership or spouse can be beneficiary of the asset or the trust and the assets will not be subject to tax. But the children will get the asset as fair market value and the estate will have to pay tax on the capital gain. If the deceased earned income in the year of their death, their estate would need to file a final tax return. The estate will be responsible for paying 23 any taxes owed on the deceased's income. If there is no capital gain, then the spouse can roll out from spousal rollover. OVERALL IMPACT

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13 The financial plan presented for James and Ashley Keigly has a significant impact on their overall financial well-being and provides them with a professional and tailored roadmap to achieve their financial goals. This comprehensive plan takes into account their unique circumstances, goals, and priorities and offers expert recommendations and strategies across various key areas of financial planning. Homeownership: The plan thoroughly evaluates their mortgage qualification amount and down payment requirements, considering their income and expenses. It provides options to save for a conventional mortgage or explore non- conventional mortgage options with CMHC insurance, ensuring their housing aspirations align with their financial capabilities. Education Savings : Recognizing the importance of investing in their children's post-secondary education, the plan explores suitable options such as Registered Education Savings Plans (RESPs) and Tax-Free Savings Accounts (TFSAs). It offers guidance on optimizing returns, mitigating inflation risks, and accumulating funds dedicated to their children's educational needs. Investment Review: The plan emphasizes the significance of reviewing and optimizing their investment portfolio to align with their long-term financial objectives. It suggests a diversified approach, considering their risk tolerance and goals. By recommending a balanced mix of asset classes, including equities, bonds, and other investments, the plan aims to enhance potential returns while managing risk. Risk Management: Mitigating financial risks is a crucial aspect of the plan. It highlights the importance of life insurance coverage for both James and Ashley, disability insurance for James, and a review of health and dental insurance options. Additionally, it emphasizes the need to establish an emergency fund to handle unforeseen expenses and maintain financial stability. Tax Planning: The plan provides insightful guidance on income tax planning, including an overview of tax rates, allowable deductions such as automobile expenses, and non-refundable tax credits. It presents strategies to optimize their tax position, minimizing their tax liability within legal bounds. Asset Management: The plan outlines effective strategies for managing their assets. It underscores the importance of budgeting, cash flow management, and proper diversification. By offering recommendations tailored to their liquid assets, investment assets, and personal use assets, the plan ensures a well-balanced and well-managed asset portfolio. Retirement Planning: Recognizing the significance of retirement planning, the plan assists James and Ashley in defining their retirement goals and identifying potential income sources. It suggests maximizing contributions to tax-advantaged retirement accounts, developing an appropriate investment strategy, and considering healthcare and long-term care costs to ensure a secure and comfortable retirement. Estate Planning: The plan emphasizes the importance of estate planning by recommending revisions to their wills, the appointment of guardians for their children, and the establishment of trusts for inheritance. It addresses critical aspects such as power of attorney, final arrangements, and debt management, aiming to facilitate the efficient transfer of assets and protect their family's financial legacy. In conclusion, the financial plan provides James and Ashley Keigly with a customized and professional roadmap to achieve their financial goals. By implementing the strategies and recommendations outlined in the plan, they can proactively manage risks, optimize their investments, and establish a solid foundation for their financial well-being.