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Lecture 18

ADMS 3541 Lecture Notes - Lecture 18: Registered Education Savings Plan, Tax Rate, Cash Flow Statement

Administrative Studies
Course Code
ADMS 3541
Kwok Ho

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Chapter 1: Introduction 05/13/2012
Simple model:
Financial goal = Existing savings + Investment Income for n years
on the existing savings + (Earnings – Consumption each year) +
Investment income on the annual savings, n.
Worth reading newspapers:
The Globe and Mail’s Report on Business
The Financial Post section of The National Post
Investment Executive/IE Money
Do not recommend relying on television or radio for financial advise
other than the general updates in finance
Types of Financial Planners:
Salaried employees of institutions
oGeneralized computer print-out without much value.
Commission planners
oTend to sell you products that gain the planner most
Fee-based planners
oCompensated partly in the form of a fee, usually hourly, that
you pay them, and partly from commissions from the
oReduces conflict of interest, but not eliminated.
Fee-only or fee-for-service planners
oCharge by the hour for the time spent doing the planning
oEarn all income from clients and take no commission

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Chapter 3: Setting Goals and the Financial
Planning Process 05/13/2012
Financial Goal:
Measured in dollars
Completion time
How to set goals:
Start with brainstorming, than convert all desires into financial
goals that include the two key factors mentioned above. Include
both short- and long-term goals.
The financial planning process – Family Working Through Personal
Goal Setting
Action Plan
Take Action
Feedback (Monitor Progress)
The professional six step financial planning process:
Establish the client – Planner Engagement
Gather client data and determine your goals and expectations
Clarify your present financial status and identify any problem areas
or opportunities
Develop and present the financial plan
Implement your financial plan
Monitor the financial plan
Problem 2:
N = 10 years (retire)
PV = -$575,000
FV = $1,000,000
I/Y = 5%
PMT = ? = -$5,039.44

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Chapter 6: The Life Cycle and Financial
Intermediation 05/13/2012
Family life cycle groupings:
Younger, single
Younger couple. No children
Couple, dependent children
Single, dependent children
Older couple, children independent or nearly so
Older single
Couple, retired
Single, retired
Financial intermediation: Process of transferring money from surplus
economic units to economic units that have a productive use for the
Four pillars:
Trust companies
Life insurance companies
Investment dealers
Schedule A Banks regulated under the bank act. Bank of Canada
regulated federally which provides the money supply to temporary
liquidity to the Schedule A Banks.
Schedule B Banks are much smaller, and few exist. Some do not have
retail locations at all. Concentrated in the corporate and commercial
sectors, occasionally in particular ethnic communities.
Few trust companies now exist independent of the banks
Question 4)
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