University Financial Planning Report: Portfolio Analysis

This financial planning report begins with a risk tolerance questionnaire to assess the client's investment risk appetite, time horizon, and liquidity needs. Based on the assessment, a recommended asset allocation is provided, suggesting a balanced portfolio with 40% Canadian equities, 20% property and infrastructure, 30% fixed interests, and 10% short-term deposits. The report details the recommended portfolio, including specific fund investments like RBC Canadian Equity Fund, Mawer Canadian Equity Fund, Canadian National Railway Co., AGF Fixed Income Fund, and Apex Fixed Income Fund, along with the rationale for each selection. It outlines the transactions required to implement the portfolio, explaining how investments can be funded through savings, share market income, salary, and retirement plans. The report emphasizes the importance of regular income assessment and savings for effective financial planning, including retirement planning, and concludes with a discussion on the rate of return.

Running head: FINANCIAL PLANNING
Financial planning
Name of the student
Name of the university
Student ID
Author note

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Table of Contents
1. Risk tolerance questionnaire.................................................................................................................................................................................2
2. Recommended asset allocation.............................................................................................................................................................................5
3. Recommended portfolio........................................................................................................................................................................................5
4. Transactions to be taken in the Recommended Portfolio.....................................................................................................................................8
5. Rate of return......................................................................................................................................................................................................10

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1. Risk tolerance questionnaire
Questio
n no. Question A B C D E Answer
1 How would you classify
the willingness for
accepting the investment
risk for achieving the
investment objective
Low Below
average
Average Above average High
2 You plan to start
withdrawing the money
from investment in how
many years
Less than 1 Year 1-2 years 3-5 years 6-10 years More than 10
years
3 As you withdraw the
money, You plan for
spending it over the
period of how many years
Less than 2 Year 2 - 4 years 4-8 years 8-10 years More than 10
years
4 While investing for long
term period, you are
planning to keep the
investment for how many
years
Less than 2 Year 2 - 4 years 4-8 years 8-10 years More than 10
years
5 When the market goes
down, you prefer to sell
some of the riskier
investments and will put
the amount in safer
investment
Strongly disagree Disagree Somewhat
agree
Agree Strongly agree

3FINANCIAL PLANNING
6 You would invest in the
mutual fund only on the
basis of brief
conversation with a
friend, relative or co-
worker
Strongly disagree Disagree Somewhat
agree
Agree Strongly agree
7 Your current and future
income sources including
pension or salaries are
Very unstable unstable Somewhat
stable
stable Very stable
8 When it comes to
investing in mutual fund
bonds or stocks, you
would describe yourself
as
Very
inexperienced
Somewhat
inexperience
d
Somewhat
experienced
Experienced Very
experienced
9 Considering the return
expectation and your time
horizon, what degree of
the return volatility u
think you can tolerate
Low Low to
moderate
Moderate Moderate to high High
10 1. How long you can
tolerate the difficult
environment of market
where the portfolio is
losing its value or
continues to recover the
value
Less than 2 Year 2 - 4 years 4-8 years 8-10 years More than 10
years

4FINANCIAL PLANNING
11 1. Which of the
following statement
describes liquidity need in
the best way?
You require
significant
liquidity for the
portfolio and will
require to convert
most of the
holdings to cash in
short term period
You may
need
significant
part of
investment
capital
within 1
year
You will
not
anticipate
the need for
withdrawal
beyond the
generated
income
from
portfolio. In
case of
emergency
maximum
10% will be
withdrawn.
you do not
anticipate the need
for withdrawals
beyond the
generated income
from portfolio. In
case of emergency,
you have alternative
source to phase the
withdrawals for 1 to
3 years
You are
committed to
the strategy of
long-term
investment and
will not require
access to the
investment for
next 3-5 years.

5FINANCIAL PLANNING
2. Recommended asset allocation
Asset Target % Range % Notes
Canadian equities 25 30–40
Property and infrastructure 25 20–30
Fixed interest 15 10–25 Long-term deposits
Short-term deposits 15 10–50 Includes short-term
deposits
3. Recommended portfolio
Defensive strategic asset allocation
Canadian equities 40% 60% growth
Property and infrastructure 20%
Fixed interests 30%
40% defensiveShort-term deposits 10%
Total 100%
As the risk tolerance level of the client is medium and they want regular return from
the investment, they will be recommended balanced portfolio. It will also enable the client to
fulfil their medium to long term objective with regard to finance. Therefore, they will require
the investment strategy that can deal with the tax and inflation impact. They are expecting an
average return of 6% for the next 20 years.
The retirement goal of the client is to earn $ 50,000 a year in today’s dollars. Let’s
assume the required rate of return is 6%. Therefore, the amount of $ 50,000 in today’s dollar
that is the net present value of the amount will be –
NPV of $ 50,000 at 6% return for 22 years = $ 44,521 approx.

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(Current age of Ming = 38 years, suppose the age of retirement = 60 years. Therefore, years
left for retirement is = (60 – 38) = 22 years)
Therefore, to earn $ 50,000 each year after retirement, the client is required to invest $
44,521. The amount will be availed from the RRSP that is the Registered Retirement Saving
Plan of the client.
Recommended portfolio in details –
Fund Investment (%) Investment (amt)
Canadian equities
RBC Canadian equity fund 20% $8,904
Mawer Canadian equity fund 20% $8,904
Property
Canadian National Railway co. 20% $8,904
Total growth fund 60% $26,712
Fixed interest
AGF fixed income fund 30% $13,356
Short-term deposits
Apex fixed income fund 10% $4,452
Total defensive fund 40% $17,808
Total 100% $44,521
RBC Canadian equity fund – the main objective of this fund is to offer long term growth of
capital through investing in the equity securities of big Canadian companies for providing
wider exposure to the economic growth opportunities in Canada. It provides high level of the
monthly cash flow and it is relatively tax efficient. It mainly consists of capital gains, return
on capital and the interest income. It also provides the modest growth for the capital. Out of
the total investment amounting to $ 44,521, 20% that is $ 8,904 will be invested in RBC
Canadian equity fund. It will help the client to get regular return and will enable the client to
maintain their net asset value.

7FINANCIAL PLANNING
Mawer Canadian equity fund – this fund is capped to existing and new mutual fund
investors. This is helpful in the limited liquidity securities in small cap segment of Canadian
equity market. It ensures to offer best possible small cap product for the individual. The main
objective of the fund is investing for the long-term above average and risk adjusted returns
through investing primarily in the Canadian companies securities. Short-run investments or
treasury bills that do not exceed 3 years for maturity can also be used regularly. This fund is a
larger capitalization fund. Investors seeking the long-term and above average growth can
tolerate the equity volatility and having medium to high level of risk tolerance level can go
for this equity fund. For achieving the objectives of investment strategy, the manager of the
fund systematically creates the widely diversified portfolio for the wealth creating companies
with the excellent management teams that is bought at the discounts to the intrinsic values.
Out of the total investment amounting to $ 44,521, 20% that is $ 8,904 will be invested in
Mawer Canadian equity fund. It will help the client to get regular return and will enable the
client to maintain their net asset value.
Canadian National Railway Co. – it is the asset management arm for Canadian National
Railway Company. The firm is responsible for managing the pension funds for the clients and
invests in the public equity markets. The main reason behind investing in Canadian National
Railway Co. is that from the competitive viewpoint the chances for challenging and emerging
supremacy of the Canadian national are beyond comprehension. Further, railroads are the key
for keeping north American economy firing for all cylinders. Finally, the Canadian National
offers the investors quarterly dividend of $ 0.4125 per share that leads to 1.68% yield on
current stock price. It also raised the dividend over last few years. Therefore, investing into
this infrastructure will enable to get regular return on the investment. Out of the total
investment amounting to $ 44,521, 20% that is $ 8,904 will be invested in Canadian National

8FINANCIAL PLANNING
Railway Co. It will help the client to get regular return and will enable the client to maintain
their net asset value.
AGF fixed income fund – this is the investment strategy with fixed income that has managed
duration approach and is supported by the high quality credit grade of investment with
attractive yield. The main reason behind investing in this fund is the fund assures steady
income through investing in the high quality corporate securities for fixed income and in
Canadian government. In addition to this, the investors who prefers the solution regarding
core fixed income that may invests in the high yields bonds, emerging debt in the market and
convertible debentures. Therefore, out of the total investment amounting to $ 44,521, 30%
that is $ 13,356 will be invested in AGF fixed income fund.
Apex fixed income fund – this fund seeks the long-term returns on the invested funds in the
fixed income securities. The main objective is to achieve maximum yield on income and such
appreciation is consistent with the preservation of invested capital. The fixed income
securities will be inclusive of provincial and Canadian securities. It is the good opportunity
for short-term investment. Out of the total investment amounting to $ 44,521, 10% that is $
4,452 will be invested in AGF fixed income fund. It will fulfil the short term needs of the
client.
4. Transactions to be taken in the Recommended Portfolio
With the advent of time, there are circumstances when the products in the investment
portfolio can be sold and new products can be purchased with the help of which the
investment planning can be effective and desired amount of the couple can be attained. The
financial market is a market that faces lots of risks and therefore the products that are
available in the market can face risks as well. In this circumstance, there can be instances that

9FINANCIAL PLANNING
the product that is ideal for the couple at the current time period needs to be purchased by
utilising money from various sources.
It is essential to gather money first in order to create a pool of money which can be
used for the purchase of the financial products and services. In accordance to the current
circumstances, it is seen that the couple would look to purchase RBC equity fund and Mawer
Canadian equity fund and these products would be purchased with the help of the savings and
the investments they have made in the savings bank accounts and even in the share market.
The income from the share market is generally high and therefore this income can be used for
the purpose of purchasing these two products.
The couple earns extensive level of salary and an amount from that salary is used for
the purpose of purchasing the Canadian National Railway property. It is a government
property bond and offers a fixed interest rate and the product is safe as well. A part of the
salary is therefore used for the purpose of purchasing the bond. The couple have long term
and short term deposits and the interest that is attained from the savings is used for the
purpose of making investments in the AGF fixed income fund and Apex fixed income fund.
The investment in these funds can be financed with the help of the retirement planning of the
couple. The couple have investments in the Retirement Savings Plan and they can withdraw a
certain percentage of the savings in order to purchase the desired products. In certain
circumstances, it is seen that the couple can sell of their some of their existing equity shares
when the prices of the shares are high in order to earn extensive earnings with the help of
which they can even purchase additional products. The retirement savings plan is one of the
key aspects with the help of which resource for purchasing the product can be attained. It is
therefore recommended that the couple should look to assess their source of income on a
regular basis and make adequate amount of savings so that their savings can be able to
finance the purchase of the investment products that have been recommended. Retirement

10FINANCIAL PLANNING
planning is one of the key planning process that is helpful in maintaining financial security
after their retirement. Hence, the maintenance of an effective investment portfolio and
planning would be helpful in creating a proper lifestyle even after retirement.
5. Rate of return
In order to calculate the Return on equity of the portfolio the individual return of different
securities are determined. Then individual return of different securities in the portfolio are
compared to calculate the return of the portfolio.
RBC Canadian Equity Fund
Calculation of forecasted Return
Year RBC Canadian equity fund
2008 -33.80%
2009 30.10%
2010 16.10%
2011 -11.30%
2012 6.10%
2013 12.60%
2014 9.30%
2015 -9.40%
2016 19.70%
2017 6.70%
Average Return 4.61%
The forecasted return of RBC Canadian Equity Fund is determined by calculating the
average return of the securities for 10 years.
Mawer Canadian equity Fund

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In case of this fund the return till date since inception of the fund is 9.8%. This is
taken as the forecasted return for the investment.
Canadian National Railway Co
The forecasted return is taken as the total return of 3.89% of 10 years.
AGF Fixed Income Fund
The AGF Fixed Income Fund the return is 3.1% for 10 years. It is taken as the
expected return.
Apex Fixed Income Fund
The expected return is -.65% as it is the year to date return.
Fund
Investment
(%)
Investment
(amt)
% forecasted
Return Return
Canadian equities
RBC Canadian eqity
fund 20% $8,904 4.61%
410.4797
2
Mawer Canadian eqity
fund 20% $8,904 9.80% 872.6033
Property
Canadian National
Railway co. 20% $8,904 3.89%
346.3700
9
Total growth fund 60% $26,712
Fixed interest
AGF fixed income fund 30% $13,356 3.10%
414.0413
6
Short-term deposits
Apex fixed income fund 10% $4,452 -0.65%
-
28.93837
5
Total defensive fund 40% $17,808
Total 100% $44,521
2014.556
1
% Portfolio Return 5%