THE MONEYSENSE COMPLETE FINANCIAL PLAN KIT WORKSHEET #1: PRIORITIZE YOUR GOALS

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1 WORKSHEET #1: PRIORITIZE YOUR GOALS Please rate each financial goal based on how important it is to you (1 = not at all important; 5 = very important) NOT IMPORTANT VERY IMPORTANT Paying down mortgage or other debt Gaining control over my spending Saving for children s education Saving for retirement Understanding my investments Knowing I have the right investment mix Active involvement in managing my investments Strategies for reducing income taxes Maintaining my standard of living in retirement Retiring early at age Developing income withdrawal strategies for/in retirement Providing a comfortable lifestyle for my family in the event of my death Creating/preserving an estate for my heirs Leaving a legacy, philanthropy Add any other financial goals or objectives you want to achieve here:

2 WORKSHEET #2: GATHER YOUR DOCUMENTS Please gather the following information before proceeding. Check off the information you can find, and stroke out any items you don t have or can t find: PERSONAL ASSETS AND LIABILITIES Deed to your home Mortgages on home most recent annual statements from your lender For each credit card, loan, line of credit: Balance owing Statements for the last six months For each bank account Statements for the last six months OTHER REAL ESTATE Deed for each property (cottage, other homes, investment real estate) Mortgages on each property most recent annual statement from lender Details of any timeshare INCOME AND EXPENSES Most recent pay stubs Pension income, CPP income, OAS income INCOME TAXES Income tax returns for the past two years Notices of Assessment sent by Canada Revenue Agency for the past two years INVESTMENTS AND RETIREMENT ASSETS Most recent statements for all non-taxable sheltered investments Pension information plan description, survivor benefit options, inflation indexing, most recent statement Most recent statements for all RRSPs and RRIFs Employee Stock Option Plan description and most recent statement Beneficiary designations for all retirement plans Statement of expected CPP income Sheet 1 of 2

3 WORKSHEET #2: GATHER YOUR DOCUMENTS INSURANCE Life insurance policies stating type, death benefit, premium/cost and beneficiary Disability insurance definition of disability income, waiting period, benefit period, inflation indexing, who pays the premium, premium/cost Other insurance policies Home owner/tenant Automobile Critical illness Employee or retireee benefit plans description of coverage, cost EDUCATION FUNDING RESPs (most recent statements) Trust accounts (trust agreement and most recent investment statements) ESTATE DOCUMENTS Wills and codicils Power of attorney general, financial, personal care PERSONAL DOCUMENTS Prenuptial/cohabitation agreement Separation agreement Child support (received or paid) Documentation for any other financial arrangements not covered above. Sheet 2 of 2

4 WORKSHEET #3A: DETAILED NET WORTH STATEMENT CURRENT DATE: NAME: CASH AND DEPOSIT ACCOUNTS Chequing Savings Other: Other: AMOUNT OUTSTANDING DEBT Credit Card #1 Credit Card #2 Loan Line Of Credit Car Loan Home Buyer s Plan FINANCIAL INSTITUTION AMOUNT RRSPs FINANCIAL INSTITUTION AMOUNT NON-RRSP INVESTMENTS (eg. GICs, CSBs, Stocks, Employee Share Purchase Plan, Mutual Funds) FINANCIAL INSTITUTION AMOUNT PRINCIPLE RESIDENCE Mortgage Company Interest Rate Mortgage Payment Frequency of Payment Maturity Date Current Value home: Mortgage Balance: Sheet 1 of 2

5 WORKSHEET #3A: DETAILED NET WORTH STATEMENT (CONT.) VEHICLE(S) Vehicle #1 Vehicle #2 TYPE VALUE PENSION - DEFINED CONTRIBUTION Current Value: PERSONAL POSSESSIONS/ANTIQUES, ART INSURANCE LEGAL DOCUMENTS Sheet 2 of 2 Source:

6 WORKSHEET #3B: SUMMARY NET WORTH STATEMENT CURRENT DATE: NAME: INVESTMENT ASSETS AND LIABILITIES CASH & DEPOSIT ACCOUNTS OUTSTANDING DEBT RRSPs NON - RRSP INVESTMENTS OTHER: OTHER: ASSETS LIABILITIES Total Investment Assets and Liabilities: LONG-TERM ASSETS AND LIABILITIES PRINCIPAL RESIDENCE VEHICLE(S) PENSION - DEFINED CONTRIBUTION OTHER: OTHER: Total Long-Term Assets & Liabilities: TOTAL ASSETS AND LIABILITIES NET WORTH (Assets - Liabilities) Source:

7 WORKSHEET #4: YOUR SPENDING AND SAVINGS CURRENT DATE: NAME: NET INCOME MONTHLY ANNUAL RETIREMENT Income - Me (after tax and deductions) Income - Spouse (after tax and deductions) Other (eg. rental income, government benefits, investment income) TOTAL NET INCOME EXPENSES: FIXED COSTS & REGULAR MONTHLY PAYMENTS Rent / Mortgage Condo/Strata fees Property Insurance (if paid monthly) Property Taxes (if paid monthly) Heat/Gas Electricity Phone Cable Internet Cell Phone(s) Childcare / Allowance / Children s Expenses Life or Disability Insurance Premiums Provincial Health Premiums (eg. MSP, OHIP) Car Payment RRSP RESP Non-RRSP Savings Bank Fees Car Insurance (if paid monthly) Charitable Donation (if paid monthly) Monthly Payment Credit Card # 1 (if cards paid off monthly, put $0) Monthly Payment Credit Card # 2 (if cards paid off monthly, put $0) Loan Payment Line of Credit Payment Savings Goal #1 Savings Goal #2 Savings Goal #3 Other TOTAL FIXED COSTS AND REGULAR MONTHLY PAYMENTS Sheet 1 of 2 Source:

8 WORKSHEET #4: YOUR SPENDING AND SAVINGS MONTHLY EXPENSES Groceries Pet Food and Treats Personal Care (hair cuts, dry cleaning, pharmacy) Gas Taxis / Bus/ Parking Snacks, Lunches at work, Coffees Entertainment (Dining out, movies, etc) Alcohol (beer/wine) or Cigarettes Other TOTAL MONTHLY EXPENSES LUMP SUM AND ANNUAL EXPENSES Property Taxes (if paid annually) Property Insurance (if paid annually) Home Repairs and Maintenance Car Repairs and Maintenance Car Insurance (if paid annually) Medical & Dental Clothing Gifts - Birthdays, Christmas, other Charitable Donations (if paid annually) Hobbies and/or Children s Activities Self-Improvement Clubs & Memberships Professional / Accounting Fees Vet Computer/Electronics supplies and equipment Travel & Vacations Other TOTAL LUMP SUM OR ANNUAL EXPENSES TOTAL EXPENSES CASH FLOW SURPLUS DEFICIT: (Total Net Income - Total expenses) Sheet 2 of 2 Source:

9 WORKSHEET #5: YOUR LIFE AND FINANCIAL GOALS GOALS ARE DREAMS WITH A DEADLINE. DREAMS WITHOUT A DEADLINE ARE JUST WISHES. Examples: 1. Eat healthy, organic food - $250 per month - ongoing 2. Travel for six months South East Asia in $10, Save for down payment to purchase a home in five years - $40, Retire in 20 years with an annual retirement income of $30,000. COST/VALUE TIME FRAME Source:

10 WORKSHEET #6: YOUR TOP 3 GOALS Are your goals clear and measurable? What obstacles might hinder achieving your goal? What action steps will you take to achieve the goal, or overcome the obstacles? OBSTACLES ACTION STEPS 1. GOAL: DOLLAR VALUE: TIME FRAME: 2. GOAL: DOLLAR VALUE: TIME FRAME: 3. GOAL: DOLLAR VALUE: TIME FRAME: Source:

11 WORKSHEET #7: HOW YOU ARE CURRENTLY INVESTED Based on Month Day/Year statements CASH (eg. Bank Accounts, Canada Savings Bonds, GICs, Term Deposits, Money Market Mutual Funds) BONDS / INCOME (eg. Government or Corporate Bonds, Bond or Income Mutual Funds) STOCKS / EQUITY / SHARES (eg. Individual Stocks, Equity Mutual Funds or Employee Share Purchase Plan) INVESTMENT $AMOUNT INVESTMENT $AMOUNT INVESTMENT $AMOUNT (eg. ING Investment savings) ($1,500) TOTAL CASH TYPE INVESTMENTS: TOTAL BOND TYPE INVESTMENTS: TOTAL STOCK TYPE INVESTMENTS: % % % TOTAL INVESTMENTS: Source:

12 WORKSHEET #8: WHICH INVESTMENTS ARE RIGHT FOR YOU STEP 1: WHAT ARE MY INVESTMENT OBJECTIVES? ASK YOURSELF THREE QUESTIONS: 1. WHY AM I SAVING? (eg. House, Vacation, Retirement) 2. WHEN DO I NEED THE MONEY? (Check one) 3. WHAT AM I LOOKING FOR? (Rank in order of priority 1, 2, or 3) Within 1 Yr 2-5 years 5-10 years 10 years or more Safety Income Growth STEP 2: WHAT IS MY RISK TOLERANCE? HOW COMFORTABLE AM I WITH VOLATILITY? (Check One) Not Very (Low Risk) Quite Comfortable (Medium) Very Comfortable (High) STEP 3: WHAT IS MY ASSET ALLOCATION? GIVEN MY INVESTMENT OBJECTIVE AND RISK TOLERANCE, HOW MUCH DO I WANT TO INVEST IN: Cash % Bonds % Stocks % 100% STEP 4: HOW MUCH MONEY CAN I PUT TOWARDS THIS GOAL? Total saved to date Monthly contribution STEP 5: WHAT IS MY PLAN OF ACTION FOR INVESTING THIS MONEY? Source:

13 WORKSHEET #9: YOUR FINANCIAL PLAN FOR: DATE: CURRENT SITUATION (Fill in your current situation here) TOP FIVE FINANCIAL GOALS (Fill in your top five financial goals here) NET WORTH STATEMENT ASSETS Liquid Assets Registered investment accounts Primary residence Other Other TOTAL ASSETS (A) LIABILITIES Credit card balances Equity line of credit Mortgage on residence Other TOTAL LIABILITIES (L) Sheet 1 of 2

14 WORKSHEET #9: YOUR FINANCIAL PLAN NET WORTH (ASSETS - LIABILITIES) INCOME AND EXPENSES INSURANCE RETIREMENT PLANNING INVESTMENT PLANNING (See the Investment Policy Statement) ESTATE PLANNING Sheet 2 of 2 Source: Libra Investment Management (

15 WORKSHEET #9: YOUR FINANCIAL PLAN SAMPLE: USE THIS AS A REFERENCE TO FILL IN YOUR FINANCIAL PLAN FOR: Patty and Walter Berglund DATE: January 1, 2011 CURRENT SITUATION Patty and Walter Berglund are both 34 years old and have two daughters Debra and Marie ages 5 and 2. They have a household income of $110,000 and surplus cash of $20,000 a year. TOP FIVE FINANCIAL GOALS 1 To pay off $20,000 in consumer debt in one year 2. To save $5,000 for a trip to Disney World in two years 3. To pay off the $150,000 mortgage in 15 years 4. To save for Debra and Marie s post-secondary education in RESPs 5. To ensure a comfortable retirement starting at age 60 NET WORTH STATEMENT (January 2011) ASSETS Liquid Assets $4,000 Registered investment accounts $3,000 Primary residence $250,000 TOTAL ASSETS (A) $257,000 LIABILITIES Credit card balances $3,000 Equity line of credit $22,000 Mortgage on residence $150,000 TOTAL LIABILITIES (L) $175,000 NET WORTH (ASSETS - LIABILITIES) $82,000 Sheet 1 of 2

16 WORKSHEET #9: YOUR FINANCIAL PLAN INCOME AND EXPENSES Gross annual income is about $110,000 combined. Once expenses are paid, the couple has $20,000 annually in surplus cash. All of that will go towards paying down their consumer debt in the first year. In the second year, $5,000 will go towards the Disney World trip account, $5,000 towards their mortgage, $5,000 into RESPs and $5,000 into a spousal RRSP for Patty. They will continue using their surplus cash this way until goals change. If, because of unforeseen expenses, the surplus of $20,000 decreases slightly, they are to eliminate the spousal RRSP contribution for Patty in that year accordingly. INSURANCE Employers group plans provide much of your insurance needs. Walter Berglund s life insurance should be increased by $300,000 annually. RETIREMENT PLANNING Walter contributes to his company s Defined Benefit Pension Plan and should continue doing so. Walter will also put $5,000 into a spousal RRSP annually for Patty. Following this strategy, Walter can retire at age 60 and the Does retirement expenses will be adequately covered. Any negative change to the pension entitlement should be addressed immediately by revising this plan and recalculating. INVESTMENT PLANNING (See the Investment Policy Statement.) ESTATE PLANNING Patty and Walter have already drawn up and executed both wills and powers of attorney, naming each other as primary executors, trustees and attorneys. Sheet 2 of 2 Source: Libra Investment Management (

17 WORKSHEET #10: YOUR INVESTMENT POLICY STATEMENT INVESTMENT POLICY STATEMENT FOR: DATE: CURRENT STATUS OBJECTIVES AND CONSTRAINTS INVESTMENT STRATEGY GUIDELINES Cash and equivalents % Canadian bonds % Canadian equities % U.S. equities % EAFE equities % Other % The expected return from this asset mix is % per year. Sheet 1 of 2

18 WORKSHEET #10: YOUR INVESTMENT POLICY STATEMENT SECURITY GUIDELINES The investment vehicles are to be chosen to provide exposure to the target classes in a welldiversified way and at minimal expenses. LOCATION GUIDELINES To minimize taxes, allocations to the bond asset class are to be located wherever possible in registered accounts. The first choice for taxable accounts is Canadian equities. RISK CONTROL, MONITORING AND REVIEW Overall risk management is the rationale behind the investment strategy and security selection guidelines. No additional risk management controls, aside from an adherence to the guidelines contained in his document, are in place. Once per year, the portfolio should be reviewed and, if necessary, adjusted to bring the actual allocations back to the strategic target mix. To minimize transaction costs and taxes, small deviations from the target mix (less than 3%) should be ignored. This document should be reviewed at least once a year. Changes to personal circumstances that alter risk tolerance or time horizon should be incorporated in any revision. Market price movements, other than for the purpose of rebalancing per the previous paragraph, are not grounds for revision. Sheet 2 of 2 Source: Libra Investment Management (

19 WORKSHEET #10: YOUR INVESTMENT POLICY STATEMENT FOR: SAMPLE: USE THIS AS A REFERENCE TO FILL IN YOUR INVESTMENT POLICY STATEMENT INVESTEMENT POLICY STATEMENT Patty and Walter Berglund DATE: January 1, 2011 CURRENT STATUS Patty and Walter Berglund are a married couple living in Halifax, N.S. They have been married six years and have two daughters aged 5 and 2. Both are 34 years old. They own their own home, and while Walter has a good pension at work and while debt repayment is a priority they would like to start investing in the kids RESPs and in Patty s spousal RRSP in future. Walter s marginal tax rate is 37%. Patty s is 28%. Both have more than $20,000 in RRSP contribution room. OBJECTIVES AND CONSTRAINTS Patty and Walter Berglund s primary objective for their portfolio are maximizing after-tax investment returns in order to fund post-secondary education for their children and retirement for them. These objectives are to be achieved subject to the following constrains. *Risk tolerance The portfolio should be structured so that annual losses of more than 10% are expected to occur less than one year out of ten. *Time horizon The capital of the portfolio can be invested for a period of 12 to 15 years. Income will need to be withdrawn when the children enter university *Taxation As the investment portfolio and retirement funds will be in a tax-deferred account, CRA rules regarding eligible investments must be observed. *Time to be spent minimal INVESTMENT STRATEGY GUIDELINES Patty and Walter have an average tolerance for market risk and do not require a regular income from their portfolio now. So a balanced asset mix is appropriate. The recommended strategy target is: Cash and equivalents 0% Canadian bonds 40% Canadian equities 20% U.S. equities 20% EAFE equities 20% The expected return from this asset mix is 4 5% per year. Sheet 1 of 2

20 WORKSHEET #10: YOUR INVESTMENT POLICY STATEMENT SECURITY GUIDELINES Patty and Walter Berglund have neither the time nor the interest to choose individual securities and keep a properly diversified portfolio. Consequently, the investment vehicles are to be chosen to provide exposure to the target classes in a well-diversified way and at minimal expenses. Lowcost index funds, including exchange-traded funds, are to be used whenever possible. Options, hedge funds and real estate are not allowed. Leverage is not allowed. LOCATION GUIDELINES To minimize taxes, allocations to the bond asset class are to be located wherever possible in register accounts. The first choice for taxable accounts is Canadian equities. RISK CONTROL, MONITORING AND REVIEW Overall risk management is the rational behind the investment strategy and security selection guidelines. No additional risk management controls, aside from an adherence to the guidelines contained in this document, are in place. Once per year, the portfolio should be reviewed and, if necessary, adjusted to bring the actual allocations back to the strategic target mix. To minimize transaction costs and taxes, small deviations from the target mix (less than 3%) should be ignored. This document should be reviewed at least once a year. Changes to personal circumstances that alter risk tolerance or time horizon should be incorporated in any revision. Market price movements, other than for the purpose of rebalancing per the previous paragraph, are not grounds for revision. Sheet 2 of 2 Source: Libra Investment Management (