Financial Plan Project
The objective of this exercise is to get you thinking about the financial plan for your own life.
Develop a multiyear spreadsheet covering your working years and retirement years, allowing you to
analyze different scenarios for life expenses, rates of return and asset allocations, retirement needs,
types of accounts, inflation rates, etc. Chapter 4 and 20 have some background info, but please do it
from scratch on your own. Keep it simple; too much detail only obfuscates the plan. Make reasonable
assumptions about your rates of return. To develop a good plan, you should:
A) Project your income and
oad categories of expenses annually throughout your working years:
ent/home payment, cars/insurance, children, food, recreation/other discretionary. The objective will be
eventually to integrate this spreadsheet with those in B) and C). Please do not spend most of your time
on this part. This is just a starting point.
B) Research online asset allocation tools and recommendations for individuals like you. Research
specific mutual funds you will invest in, banks/
okerage firms where you will have your savings. Think
of risk and return, taxable and tax-sheltered allocations, and how your allocations will change over time.
C) Project your retirement needs. Think what it would take in today’s dollars to live well in retirement
including housing/medical, estate and pensions. Assume an inflation rate and project into future dollars.
Combine A), B) and C) into one comprehensive spreadsheet that will allow you to run scenarios by
varying the key drivers of your plan. These could be rates of return, savings rates, inflation, life events.
Spend time analyzing the scenarios.
Prepare a 9-10 page financial plan report. Page 1 is an executive summary, then a 3-4 page description
of the plan, followed by the printouts of the most important tables and graphs (not to exceed 5 pages).
Be prepared to present to your classmates.
Your 3-4-page write-up (1.5-spaced) should include:
the basic description of you
your family situation, list of assumptions about your life changes
(husband, kids, houses, job changes), expense growth, income and career progression
short description of your model drivers (inflation, expense growth, return on investments,
etirement withdrawal rate, tax management)
summary of your results (what you need to save, how you need to allocate investment- and tax-
wise, what income will you have in retirement), risk factors, and discussion of sensitivity analysis
(what if I save less? What if I don’t earn that? etc. )
You will be graded on:
Completeness of the analysis: scope to include working years and retirement years
Basic reasonableness of the results (do not end up with millions on a $20,000 income)
Depth of supporting calculations/graphs