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SimonaAAQuestionnaireResults.pdf

Questionnaire Results Simona

Simone (2023) - All Retirement Goals Different investors have different risk tolerances. Much of the difference stems from time horizon. That is, someone with a short investment time horizon is less able to withstand losses. The remainder of the difference is attributable to the individual’s appetite for risk. Volatility can be nerve-wracking for many people, and they are more comfortable when they can avoid it. However, there is a relationship between risk and return. Investors need to recognize this risk/return trade-off. The following risk tolerance questionnaire is designed to measure an individual’s ability (time horizon) and willingness (risk tolerance) to accept uncertainties in their investment’s performance. The total score recommends which of five distinct risk profiles is most appropriate for the investor.

Investment History (not scored) 1. What is your experience and overall knowledge of investments?

¡ I have no investment experience and a very low knowledge level regarding investments.

¡ I have very little investment experience and a fairly low knowledge level. ¡ I have some experience investing in mutual funds and am somewhat knowledgeable. ¡ I have some experience investing in mutual funds, individual stocks and bonds and am

somewhat knowledgeable. ¤ I am an experienced investor and have a solid knowledge base regarding investments

and am aware that markets can be volatile and unpredictable.

Time Horizon 2. When do you expect to begin withdrawing money from your investment account?

¤ Less than 2 years ¡ 2 years ¡ 3 to 4 years ¡ 5 to 7 years ¡ 8 to 10 years ¡ 11 years or more

3. Once you begin withdrawing money from your investment account, how long do you expect the withdrawals to last? ¡ I plan to take a lump sum distribution ¡ 1 to 4 years ¡ 5 to 7 years ¡ 8 to 10 years ¤ 11 years or more

Important: The calculations or other information generated by NaviPlan® version 23.7 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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Risk Tolerance 4. Inflation, the rise in prices over time, can erode your investment return. Long-term investors

should be aware that, if portfolio returns are less than the inflation rate, their ability to purchase goods and services in the future might actually decline. However, portfolios with long-term returns that significantly exceed inflation are associated with a higher degree of risk.

Which of the following choices best reflects your attitude toward inflation and risk? ¡ My main goal is to avoid loss, even though I may only keep pace with inflation. ¡ My main goal is to earn slightly more than inflation, while taking on a low level of risk. ¤ My main goal is to increase my portfolio’s value. Therefore, I am willing to accept

short-term losses, but I am not comfortable with extreme performance shifts that may be experienced in the most aggressive investment options.

¡ My main goal is to maximize my portfolio value, and I am willing to take on more extreme levels of risk and performance shifts in my portfolio to do so.

5. The table below presents a hypothetical worst case loss, expected gain, and best case gain of five sample portfolios over a one-year period with an initial $100,000 investment. Which portfolio would you prefer to hold?

Hypothetical Best Base ($)

Expected Gain ($)

Hypothetical Worst Case ($)

¡ Portfolio 1 116,500 105,300 89,500 ¡ Portfolio 2 122,200 106,400 83,500 ¤ Portfolio 3 128,800 107,400 76,200 ¡ Portfolio 4 135,900 108,400 68,200 ¡ Portfolio 5 141,400 109,200 62,300

6. Investing involves a trade-off between risk and return. Historically, investors who have received high long-term average returns have experienced greater fluctuations in the value of their portfolio and more frequent short-term losses than investors in more conservative investments have. Considering the above, which statement best describes your investment goals? ¡ Protect the value of my account. In order to minimize the chance for loss, I am

willing to accept the lower long-term returns provided by conservative investments. ¡ Keep risk to a minimum while trying to achieve slightly higher returns than the

returns provided by investments that are more conservative. ¤ Focus more on the long-term investment returns. Long-Term growth is equally

as important as managing portfolio risk. ¡ Maximize long-term investment returns. I am willing to accept large and

sometimes dramatic short-term fluctuations in the value of my investments.

Important: The calculations or other information generated by NaviPlan® version 23.7 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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7. Historically, markets have experienced downturns, both short-term and prolonged, followed by market recoveries. Suppose you owned a well-diversified portfolio that fell by 20% (i.e. $1,000 initial investment would now be worth $800) over a short period, consistent with the overall market. Assuming you still have 10 years until you begin withdrawals, how would you react? ¡ I would not change my portfolio. ¤ I would wait at least one year before changing to options that are more conservative.

¡ I would wait at least three months before changing to options that are more conservative.

¡ I would immediately change to options that are more conservative.

8. The following graph shows the hypothetical best and worst results of five sample portfolios over a one-year holding period. The best potential and worst potential gains and losses are presented. Note that the portfolio with the highest upside also has the largest downside.

Which of these portfolios would you prefer to hold?

¡ Portfolio A ¡ Portfolio B ¡ Portfolio C ¤ Portfolio D ¡ Portfolio E

9. I am comfortable with investments that may frequently experience large declines in value if there is a potential for higher returns. What is your view regarding this statement?

Important: The calculations or other information generated by NaviPlan® version 23.7 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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¡ Strongly disagree ¡ Disagree ¤ Somewhat agree ¡ Agree ¡ Strongly agree

© 2023 Morningstar Investment Management LLC. All rights reserved. Morningstar is a registered investment advisor that develops proprietary asset allocation tools used for educational purposes only. Morningstar has granted InvestCloud, Inc. and Advicent Solutions, LP. a license to use these asset allocation tools. Morningstar is not affiliated with InvestCloud or Advicent Solutions.

Important: The calculations or other information generated by NaviPlan® version 23.7 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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Assignment1Part1SimonaCaseInstructionsandRubric.pdf

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Assignment #1 Part #1 – The Simona Case

Description:

In this assignment, you will submit the current plan for the Simonas. Working in groups of two, you

will access the case in the Assignment section on Blackboard. Note that each group will be provided

with a unique version of the case, i.e., different financial figures and dates. Hence, your

recommendations in Part #2 (not yet posted) will be unique.

Instructions:

1. Open Learn@Seneca (Blackboard) and enter the Assignment section of the course.

2. Select your group members (2 students per group). Students must agree to form a group prior

to entering names. Individual assignments will NOT be accepted.

3. Open Case Study Assignment #1 Part #1 – Simonas. This is your unique case study.

4. Open Case Study Assignment #1 – Simona Asset Allocation Questionnaire. This is your asset allocation for the client.

5. Enter all case information in Naviplan, set and analyze goals in the Current Plan. Generate

reports for Part #1 submission as described below and submit as 1 file in Blackboard.

Important: Any issues working within your group must be reported to me immediately, with evidence

that you attempted to reach your partner on several occasions (e.g. texts and emails). Otherwise, each

group member will receive the same mark. It is unacceptable to submit an assignment with only 1

person’s name and then email me to report that the other member did not do any work on the

assignment.

Part #1 Submission Content – Current Plan - Due October 12 @ 11:59pm EST

Late Penalty: 10% per day; not accepted 3 days past the deadline.

Enter all appropriate information in Naviplan. Refer to the practice cases for assistance.

Under Client Reports (left hand tool bar), create the following reports for submission:

• Cover page (client names, your names, contact information, date)

• Table of contents (includes reports in order listed below)

• Objectives (create a PDF file and then upload under Custom Content)

• Plan Analysis Synopsis

• Cash Flow Surplus/Deficit – Current Plan

• What are my Education Goal Options? – Current Plan

• What are my Major Purchase Goals? – Current Plan

• What are my retirement options? – Current Plan

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Rubric – Assignment #1 Part #1 Submission

Level of Achievement

Value

(Marks)

Missing or

Incomplete

(0)

Several

Errors

(>50%)

Some

errors

(<25%)

Minor

Errors

(100%)

Cover Page: Client Names Spelled

Correctly

3

Advisor Name and

Contact Details

Table of

Contents

All sections listed in

correct order

Objectives Page (3 objectives correctly identified

and clearly explained)

3

Plan Analysis (complete and accurate) 30

What are my

options?

3 options with

accurate

figures

(dates/costs)

Retirement Goal 3

Education Goal 3

Travel Goal 3

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Feedback:

GabriellaandMichaelSinomauniquecase.docx

Gabriella and Michael Sinoma

Note Before Reading: Do not Submit this document. This is your unique case that you will use for data entry in Naviplan. Simply exit out of it so that you can come back in, or consider copying the text and saving it to a Word document on your own computer.

Gabriella and Michael have been married for 10 years. They have one son, Andre. The family lives at 45 Crescent Circle, North York, On, M4S 1R2.

The family’s birthdates are:

Gabriella: June 21, 1989

Michael: November 30, 1988

Andre: December 5, 2013

Gabriella and Michael have provided their most recent Notice of Assessments to you that show that Gabriella has $130,000 in RRSP carryforward room, while Michael has $70,000 in RRSP carryforward room.

The couple has three goals:

First, they would like to retire when Gabriella turns 63. They estimate that they will need $88475 per year in after-tax income (in today’s dollars) to live the lifestyle they’d like in retirement. They are willing to retire later if needed, but want to work no later than Gabriella's 65th birthday. The couple is knowledgeable about investing and therefore comfortable with taking moderate risk.

Second, the couple would like to fund 100% of a four-year post-secondary education for Andre. The total cost of the education is expected to be $16448 (in today’s dollars) per year. They expect that they will need the money when Andre turns 19, as he intends to take a year off to work abroad. During this time, his parents intend to supplement his earnings, but are not willing to provide more than $20220 in today's dollars. They will need to save this amount by Andre's 18th birthday.

Gabriella has contributed $6,000 to a TFSA, allocated to Andre's trip. The account earns 1% interest and the beneficiary is Gabriella's estate.

In addition, the couple has contributed $10,000 to an RESP which holds a broad-based Canadian equity fund now valued at $9,000. They each have a $15,000 TFSA that earns 3% interest.

Gabriella earns a gross salary of $91229 as head of marketing at a pharmaceutical company. Her salary is indexed to inflation and she gets paid bi-weekly. Michael is a teacher and makes $70937 gross per year. His income is paid bi-weekly and is indexed to inflation.

The couple currently has $5,000 in their joint chequing account. This account earns no interest and is earmarked for their monthly bills and emergencies.

The couple has one automobile, an SUV that is currently worth $40,000. When they purchased it in April 2022, they paid $60,000. They expect that their SUV will have zero value when it is 10 years old. Since Andre will leave home by the time the car needs to be replaced, and the couple would like to reduce their environmental footprint, they do not intend to purchase another car.

Gabriella has a group RRSP to which she contributes 5% of her salary each year. Her employer matches 100% of her contribution up to a maximum of 9% of her salary. Gabriella’s group RRSP currently has $125,000 invested in it with an asset allocation of 50% large cap Canadian equities and 50% U.S. equities. Her beneficiary is her estate. Michael does not have any retirement savings.

The couple own their home, which is currently valued at $1,000,000. Michael's father was an entrepreneur who believed in real estate as an investment. He had homes constructed for both his children. The house is owned solely in Michael’s name.

The couple has the following expenses each month:

· Housing costs, including utilities of $2175

· Food expenses of $1503.

· Transportation expenses of $1153.

· Communications (Cable TV, internet, and cell phones) expenses of $623.

· Personal expenses of $446.

· Entertainment and Extracurricular Expenses of $1032

The couple also has the following expenses each year:

· Property taxes of $6993

· Travel Expenses of $8718

Gabriella has a will that was drafted prior to her marriage which lists her parents as beneficiaries and executors. Michael does not have a will. Neither has a power of attorney.

Gabriella and Michael also filled out an Asset Allocation Investment Questionnaire. You will find it on the Assignments page on Learn@Seneca (Blackboard). They expect to pay a 2% annual tax-deductible advisory fee.