Business & finance benchmark financial planning assignment

BENCHMARKFINANCIALPLANNINGASSIGNMENT.docx

BENCHMARK FINANCIAL PLANNING ASSIGNMENT

THERE ARE THREE DIFFERENT PARTS TO THIS ONE SSIGNMENT

PLEASE USE NO AI

ATTACHED SEPARETELY WILL BE THE T=BENCHMARK TEMPLATE

Six Topics of Financial Planning

The six major components of a financial plan include:

1. Financial (Cash Flow) Management

2. Tax Planning and Home Buying

3. Insurance Planning (Risk Management)

4. Investing/Asset Planning

5. Retirement Planning

6. Estate Planning

Using the attached "Benchmark – Personal Finance Plan" template, complete the following three parts.

Part I: Spending Analysis

For Part I of this assignment, you will complete the Financial (Cash Flow) Management component of your own personal financial plan.

Financial (Cash Flow) Management: First, you will need your original cash flow estimate that you created in Financial Portfolio Project: Part 1 assignment in Topic 1, including your "Daily Spending Log," in which you worked on tracking your expenses for 1 month.

1. Create a spreadsheet that lists the various expense categories in one column, the dollar amounts of your original estimates of your monthly expenses in the next, and then show your actual expenses that you tracked in your spending log in the next column. Note: Your actual expenses in many categories will likely be quite different from your original estimates. There is no need to have spent what you predicted. In fact, much awareness can come from the areas in which your estimates where different from your actual spending.

2. Next, add a "Spending Plan for Next Month" column. Based on the differences in your spending estimate and the actual amounts from tracking spending, determine what dollar amounts you would now set for each category. If you find that you need to add new categories now that you have tracked your own actual spending, please feel free to add those.

3. Indicate whether each expense category is a need or a want.

In 250-300 words, reflect on the month of spending that you tracked and answer the following questions:

1. What surprised you about your actual spending versus what you originally estimated?

2. Describe what you will or will not change for your spending plan next month and include supporting rationales for either decision.

3. Refer to the balance sheet you created in your Financial Portfolio Project: Part 1 assignment in Topic 1. Describe how your spending plan will help you meet your financial goals and increase your net worth.

4. How could you use this process for your financial goals?

Part II: Updated Financial Considerations

For Part II of this assignment, you will complete the Tax Planning and Home Buying, Insurance Planning (Risk Management), Investing/Asset Planning, Retirement Planning, and Estate Planning components of your own personal financial plan.

Tax Planning and Home Buying: Review your Financial Portfolio Project: Part 4 assignment from Topic 3. Submit a revised plan based on feedback you received or on new ideas you now have regarding tax planning and home buying. What changed in your submission? If you do not have any changes to apply, please note that as well and include a rationale for why no update was required.

Insurance Planning (Risk Management): Review your Financial Portfolio Project: Part 5 assignment from Topic 4. Submit a revised plan based on feedback you received or on new ideas you now have regarding insurance. What changed in your submission? If you do not have any changes to apply, please note that as well and include a rationale for why no update was required.

Investing/Asset Planning: In 250-300 words, address the following:

1. How do you think investments will help you reach your financial goals?

2. Identify and describe your risk tolerance by considering factors such as your financial stability, investment knowledge, and comfort level with market volatility.

3. Determine and describe a possible asset allocation strategy (i.e., percentages across stocks, bonds, cash, other) based on your risk tolerance and investment goals. Does your proposed strategy provide diversification? How would you adjust your proposed asset allocations in the short term (i.e., less than 3 years) versus the long term (i.e., 10 years or longer)?

Retirement Planning: Review your Financial Portfolio Project: Part 6A assignment from Topic 5. Submit a revised plan based on feedback you received or on new ideas you now have regarding retirement planning. What changed in your submission? If you do not have any changes to apply, please note that as well and include a rationale for why no update was required.

Estate Planning: Review your Financial Portfolio Project: Part 6B assignment from Topic 5. Submit a revised plan based on feedback you received or on new ideas you now have regarding estate planning. What changed in your submission? If you do not have any changes to apply, please note that as well and include a rationale for why no update was required.

Part III: Financial Stewardship, Plans, and Goals

For Part III of this assignment, you will reflect on the importance, principles, and characteristics of financial stewardship.

Write a 150-250-word summary considering your financial legacy and gift-giving strategies from a Christian worldview perspective. Why is this important and how can you use financial planning tools to meet these objectives?

Review the various goals discussed in your Financial Portfolio Project: Part 2 assignment from Topic 2 and consider your overall life goals. Think about how they can serve as a basis for establishing meaningful financial goals and accomplishing them now and in the future.

In 250-300 words, address the following points:

1. Provide an explanation of how you can implement your financial plans and goals. These can relate to the six main financial planning topics or include other topics, such as giving, education planning, credit, etc.

2. How do you plan to evaluate whether or not you are on track to meet your financial goals? What adjustments can you make to meet your financial goals?

3. Identify two or three concepts you learned so far in this course and how you intend to apply them to your life for personal benefit. From a Christian worldview perspective, how might these concepts also contribute to the common good of those in your circle of influence.

FinancialPortfolioPart3.docx

1

Financial Portfolio Part 3:Time value of money

Dominica Thomas

Grand Canyon University

17 November 24

1. Finding and Measuring Your Credit Score

It is possible to know and follow your credit score on sites including AnnualCreditReport.com or Credit Karma, or through the bank’s online interface. These services offer your credit score from credit bureau such as Experian, Trans union, and Equifax. Having good credit accounts for many things such as the eligibility to borrow credit, the interest rates charged and it determines one’s financial status (Betterton and Subitch, 2024). Good credit rating basically proves to the lenders that you are worthy and that you can be assigned more benefits contained in the loan than being penalized through high interest rates.

2. Credit Rate Based on Credit Rating

The rates set today with the help of resources such as Bankrate.com indicate that people with the 600-level credit score will have the interest rate for the auto loan at the level of 9.00%. People with a 750-level credit score can afford a much lower interest rate, approximately, 4.00 %.

3. Interest Paid on an Auto Loan of $25000 for a period of 5 Years

For a $25,000 loan financed over 5 years, the total price of the car will vary based on the interest rate:

• At 9.00% interest (600-level credit score):

o Monthly payment: Approximately $515.79

o Total loan payment over 5 years: $30,947.26 as per reports including interest charged.

• At 4.00% interest (750-level credit score):

o Monthly payment: Approximately $460.61

o Total loan payment over 5 years: This The interest has brought the total bill of the company to $273,365.

So, increasing one’s credit score results in saving of $3,310.66 while repaying the borrowed amount.

4. Car Loan: Comparing with Credit Card Purchase

An auto loan generally costs less in interest than a credit card because it is a secured with the car itself. Auto loans also have definite repayment periods (for example 5 years) therefore, fixed monthly installments. On the one hand, credit cards tend to have higher rates of interest Charge and can contain revolving balances which means that more credit debt will be acquired if the balance is not settled completely at the end of the month (Moscato et al., 2021). Moreover, credit card is more costly in terms of payment because credit card balance increases on daily basis.

References

Betterton, R. and Subitch, R. (2024). Best auto loan rates in November 2024. Bankrate. Available at: https://www.bankrate.com/loans/auto-loans/rates/

Moscato, V., Picariello, A., & Sperlí, G. (2021). A benchmark of machine learning approaches for credit score prediction. Expert Systems with Applications, 165, 113986.

FinancialPortfolioPart3.docx

1

Financial Portfolio Part 3:Time value of money

Dominica Thomas

Grand Canyon University

17 November 24

1. Finding and Measuring Your Credit Score

It is possible to know and follow your credit score on sites including AnnualCreditReport.com or Credit Karma, or through the bank’s online interface. These services offer your credit score from credit bureau such as Experian, Trans union, and Equifax. Having good credit accounts for many things such as the eligibility to borrow credit, the interest rates charged and it determines one’s financial status (Betterton and Subitch, 2024). Good credit rating basically proves to the lenders that you are worthy and that you can be assigned more benefits contained in the loan than being penalized through high interest rates.

2. Credit Rate Based on Credit Rating

The rates set today with the help of resources such as Bankrate.com indicate that people with the 600-level credit score will have the interest rate for the auto loan at the level of 9.00%. People with a 750-level credit score can afford a much lower interest rate, approximately, 4.00 %.

3. Interest Paid on an Auto Loan of $25000 for a period of 5 Years

For a $25,000 loan financed over 5 years, the total price of the car will vary based on the interest rate:

• At 9.00% interest (600-level credit score):

o Monthly payment: Approximately $515.79

o Total loan payment over 5 years: $30,947.26 as per reports including interest charged.

• At 4.00% interest (750-level credit score):

o Monthly payment: Approximately $460.61

o Total loan payment over 5 years: This The interest has brought the total bill of the company to $273,365.

So, increasing one’s credit score results in saving of $3,310.66 while repaying the borrowed amount.

4. Car Loan: Comparing with Credit Card Purchase

An auto loan generally costs less in interest than a credit card because it is a secured with the car itself. Auto loans also have definite repayment periods (for example 5 years) therefore, fixed monthly installments. On the one hand, credit cards tend to have higher rates of interest Charge and can contain revolving balances which means that more credit debt will be acquired if the balance is not settled completely at the end of the month (Moscato et al., 2021). Moreover, credit card is more costly in terms of payment because credit card balance increases on daily basis.

References

Betterton, R. and Subitch, R. (2024). Best auto loan rates in November 2024. Bankrate. Available at: https://www.bankrate.com/loans/auto-loans/rates/

Moscato, V., Picariello, A., & Sperlí, G. (2021). A benchmark of machine learning approaches for credit score prediction. Expert Systems with Applications, 165, 113986.

FinancialPortfolioPart2.docx

1

Financial Portfolio Part 2: Time value of money

Dominica Thomas

Grand Canyon University

17 November 24

Short-term goal: SMART Smart, Measurable, Achievable, Relevant and Timebound goals.

S: Cut expenses and be able to be able to take a vacation to Mombasa thus being able to save $ 1,200.

M: Save $100 each month.

A: Reduce the spending on foods when eating outside the home and other nonessential consumption.

R: It matches my need to make the holiday a relaxing one.

T: This should be done in one year.

Intermediate goal:

S: Keep $10, 000 as a down payment towards the purchase of a car.

M: Save $417 each month.

A: Dedicate few rupees of monthly emoluments and any incentive earned.

R: It matches up well my requirement for car as means of reliable transport.

T: This must be accomplished in 24 months.

Long-term goal:

S: Save $100,000 for retirement.

M: Spend £50 less each month, plus earnings from each of the investments.

A: It is important that you invest in a diversified way.

R: It correlates with what I want for my retirement, a comfortable lifestyle.

T: This goal must be met in the next 15 years.

Time value of money calculations

Calculation of the future value using the TVM equation:

FV=PV* Where:

FV = Future Value

PV = Present Value (initial savings)

r = Interest rate per period

n = Number of periods

Assuming two different interest rates: 5% and 7%

1. 5% interest rate:

r=5%

PV = $10,000

r= 5% = 0.07

n = 2 years

FV =1000*

FV =10000* (1.1025) FV = $11025 2. Interest rate of 7% FV=PV* r=7%

PV = $10,000

r= 7% = 0.07

n = 2 years

FV =1000*

FV =10000* (1.1149) FV = $11449 Summary

Question 1.

The length of time plays a very large role in what kind of money can grow through compounding of interest. Thus, remembering that the longer the money is left to grow, leads to its growth, makes people be more careful, and hence the time horizon should be taken seriously (Hayek & Kresge, 2020). In the case of savings and investments this implies that initial contributions create more compounding than the later and pushes the growth of wealth. With longer time horizon, one can allow himself to be enriched more by interest accrued on the amount.

Question 2.

To determine how much to set aside today, I need to:

Set a clear goal: Be very clear on goals and time for each goal.

Estimate the future value: Determine how much I must save tomorrow to meet that goal in the future.

Apply TVM: All you need to do is use the present value (PV), mentioned above; to find out how much one needs to invest to get the future value (Anderson, 2023).

Break it down: Subdivide the future value to reasonable monthly or year-end savings goals.

Review and adjust: Make it some kind of check-points index wherein contributions can be evaluated against change in rates of interest or income more frequently.

Question 3.

Inflation sees the level of purchasing power of enhancing its money power and its ability decreases after a certain period. It means that even if an investment increases in nominal value has the potential of being reduced by inflation to its real value (Anderson, 2023). For instance, $100000 in 10 years will be equivalent to $85000 depending on inflation of 2%per year. To hedge against inflation, one must invest in things that have proven to do better than inflation rates like stock, real estates as opposed to keeping money in a savings account.

References

Anderson, B. M. (2023). The value of money. Good Press.

Hayek, F. A., & Kresge, S. (2020). The Denationalization of Money: An Analysis of the Theory and Practice of Concurrent Currencies 1. In Good Money, Part II (pp. 128-229). Routledge.