Financial Plan

You will complete four spreadsheets: Worksheet 1: Personal Financial Goals; Worksheet 2: Financial Objectives; Worksheet 4: Balance Sheet; and Worksheet 5: Simplified Income Statement, and submit the completed spreadsheets to your instructor. In the Worksheet 2 file, append the length of the file by writing a short summary (2–3 pages) of your observations of this exercise in identifying personal financial challenges and opportunities while completing these spreadsheets. Mention each spreadsheet, specifically, and indicate specific line items of concern to you.

Part II: Long-Term Personal Financial Goals 

Now that you expanded your knowledge regarding long-term financing for a home or vehicle purchase as well as any regulatory or recommended insurance requirements, consider the purchase of a new home, vehicle, or both. You may even contemplate the future purchase of a vacation home, or a recreational vehicle, and how these would change your financial plan. Complete both of the following spreadsheets: Worksheet 11: Worksheet for Calculating the Maximum Monthly Mortgage Loan for Which You Qualify, and Worksheet 9: Worksheet for the Lease Versus Purchase Decision. Submit the completed spreadsheet(s). In a separate Word file, indicate your intentions in completing the exercise. Mention each spreadsheet, specifically, and indicate how the purchase of these new assets will affect your prior plan submitted during Part I, and describe the change.

• Worksheet 11:Worksheet for Calculating the Maximum Monthly Mortgage Loan for Which You Qualify
• Worksheet 9:Worksheet for the Lease Versus Purchase Decision
• In a separate Word file, indicate your intentions in completing the exercise. Mention each spreadsheet, specifically, and indicate how the purchase of these new assets will affect your prior plan submitted during Part I, and describe the change. Short paper assignments must follow these formatting guidelines: double spacing, 12-point Times New Roman font, one-inch margins, and discipline-appropriate citations.Page length requirements: 1–2 pages. 

Part III: Personal Financial Plan 

Your final part is a completed personal financial plan that integrates your previous financial plan in Part One and Part Two, as well as retirement planning and funding of your needs through investments in mutual funds or equities.

• Worksheet 16: Worksheet for Funding Your Retirement Needs
• Worksheet 20: Your Personal Financial Goals Worksheet

The Worksheet for Funding Your Retirement Needs entails planning for retirement. Be sure to include the values of any retirement savings you presently have on your Balance Sheet, such as a 401(k). For this exercise, presume that the amount in this savings plan will be static, and that you will draw all future needs from an investment portfolio that will be developed based on your risk preference.

 

Your Personal Financial Goals Worksheet summarizes all of your financial goals. In order to measure the amount required to fund your goals from Worksheet 1, along with a future mortgage, vehicle purchase, and retirement plan, the net present value of these amounts will have to be summarized. Using the return derived from your 5-stock portfolio as the realized return, calculate how much you would have to deposit each year until retirement to fund all of your initiatives, assuming the rate of return on these equities is constant. You will likely identify a gap between the annual savings required to support your financial goals versus the availability of your present resources. Complete a calculation of the annual amount required to support any gap between the amount that you have available for savings and investment that you calculated on your Simplified Income Statement Worksheet, and what you will need to save and invest to fund your financial goals. This amount will be represented by an annual annuity funded by your savings drawn from your present income; assume that salary increases will be exactly offset by inflation and, thus, your salary will be static. Recall that if you currently have automatic deposits to a 401(k), these will be redirected to the portfolio you have developed.

 

In an Excel spreadsheet, detail the returns on five selected stocks that you will use as the basis for creating wealth required to support your personal financial initiatives. Select five key stocks and determine their expected return from finance.yahoo.com. Presume you would invest 20% equally in these stocks and average the return. The objective is to develop an investment strategy, as a suggestion, with stocks of your choosing and/or mutual funds, which support your future financial needs.

 

In the 2-4 page written commentary, summarize and describe your intentions. Explain your rationale for selecting the stocks in your portfolio, including your own risk tolerance and any considerations for diversification. Describe your opportunities and challenges with implementing your financial plan. Document the annual savings required to fund all of your financial goals according to your calculations. If there is a gap with the total amount you are able to realize based on your current income, develop and document a plan to supply the difference. Will you have to make changes? Indicate how you might revise your plans. Various alternatives may include finding another career position and increasing income, or purchasing a smaller home, curtailing retirement funds, or deriving savings elsewhere.