West Virginia University Personal Financial Planning Summer 2014 BADM 651

Transcription

1 West Virginia University Personal Financial Planning Summer 2014 BADM 651 Instructor: Naomi E. Boyd, Ph.D. 216 Business & Economics Phone: Cell: (FEEL FREE TO TEXT ME QUESTIONS) Online Office Hours: Please arrange via . Class Format: Online Welcome to Personal Financial Planning. I am looking forward to a productive term. I would like to describe the course for you in terms of my expectations for your participation in class discussion boards and the requirement for homework. I like to have a lot of class participation; I believe your comments make the class more interesting and relevant for you. Please be advised that participation will count toward your final grade. Since this class will be conducted online, online discussion boards will be used to facilitate this participation. COURSE DESCRIPTION: We will be going over most areas of personal financial planning including the areas of investment, insurance and taxes. Participants will have a completed financial portfolio and plan upon completion of the course. COURSE DESCRIPTION: As a manager of another s business assets, you should have a firm grip on your own financial situation. Unfortunately, most individuals do not make a conscious effort on this charge. The specific purpose of this course is to offer individual students the opportunity to self-reflect and plan in specific personal financial planning areas. The planning components encompass self-assessment, personal budgeting, insurance coverage, investment planning, managing credit, retirement planning, estate planning, and graceful aging. Discussion of these topics is offered on a personal basis with the overall objective of allowing the student to get in touch with his/her individual situation at an early date which should facilitate a much more focused planning approach in future years. The suggestion is that If you don t manage your money, your money will manage you! LEARNING OUTCOMES Upon completion of this course, you should have: 1. Developed a Financial Planning Database 2. Formulated Personal Planning Goals

2 3. Demonstrated the use of Cash and Credit Management 4. Assessed Your Insurance coverage 5. Evaluated your Investment Portfolio 6. Assessed Your Tax Plan 7. Developed a Plan for Major Acquisitions 8. Formulated a Plan for Funding/Enjoying Retirement 9. Formulated an Estate Plan HONOR CODE In this course, you are expected to abide by the following honor code, I will neither give nor receive assistance on any of the assignments given. Please abide by and attest to same by signing off on this testament on all written work. MAKE UP WORK OR EXTRA CREDIT I do not accept late work. This means assignments that are not turned in by the beginning of class will be assigned a zero. Please keep this in mind when preparing assignments at the last moment. Technology is not perfect, accordingly I suggest that you do not wait until 30 minutes before class to print out work or to put the finishing touches on the assignments or you risk receiving a zero on the assignment. There will be no make up work nor extra credit available. GENERAL If you have a disability please let the professor know no later than the second class so that all accommodations necessary can be implemented. You may use calculators on any and all assignments. You may NOT share calculators during examinations. You may not use programmable calculators or PDA s or telephones for obvious reasons. REQUIRED TEXT Focus on Personal Finance: 4th Edition by Kapoor/Dlabay/Hughes McGraw Hill Please also begin reading widely from the Wall Street Journal, Business Week, Newsweek, Money, Fortune, etc. We are going to cover a lot of ground in our online discussions, please bring in as much from the business press as possible this will make it more relevant and interesting to all. CASE STUDY: Over the course of the eight weeks you should be working towards completion of the requirements of the case study. This is meant to provide you with an analysis of your own financial situation. This portion of the course should be completed no later than July 15 th and be compiled in a professional manner with a cover page, table of contents, and orderly and organized sections and subsections. The various components of the case study are outlined as follows and can also be found online:

3 Personal Financial Planning Case Study I. Introduction: You are to assume that you are your own financial planner (i.e. you are the client as well as the planner). As such you will know the intricate details of your financial situation, your own financial goals, and your attitudes towards risk, leisure, retirement, etc. You will be asked to think about your future and plan accordingly. Your first priority is to evaluate your dream job. Investigate where you want to live, how much like positions in this location typically pay, and use this information to paint a picture of what your life will be when you leave WVU. Built into your story should be information about future (or current) plans regarding family, marriage, children, and career choices and goals. (You can use the information from your previous exercise for this portion of the case) II. Economic Information Assumptions: Over the past year you made 10% on all of your investments. If you do not have any investments, forecast how much of your future salary you will invest, what you expect your company to contribute, and use this amount as your base. Your salary is expected to grow 5% each year. Inflation is expected to be 4% annually. External Environment Analysis: Perform an external environmental analysis to include in your comprehensive financial plan. Pay particular attention to recent political events, the financial crisis, and the current economic outlook. Your external environment analysis should include a comprehensive examination of the key U.S. economic indicators, as well as events in global markets. Your analysis should indicate how past, current, and future factors in the external environment of your client will have an impact on your client today and in the future. Internal Environment Analysis: Perform an internal environmental analysis to include in your comprehensive financial plan. The internal analysis should address the following: Life cycle positioning (Age, Marital Status, Dependents, Income level, Net worth) Attitudes and beliefs towards government, taxation, leisure, and work Special needs (divorce, aging parents, disability, special needs dependents) III. Personal Budgeting: Your objective for this portion of the case is to create a personal budget for yourself. Start by evaluating the past year s expenditures and income to help develop a current budget. It is your responsibility to monitor your budget over the next two months to determine whether you are on target. Document any deviations from your budget and offer explanations as to why they occurred including whether they were one time impulse purchases, or whether they are expenditures which are either seasonal or recurring that may need to be implemented into the budget. Based upon the current budget that you compile, you must also create a budget for after you graduate from the EMBA program. This means that you will need to gather data and project what your

4 expenditures will be assuming you will either be promoted or obtain a new position once you complete your studies. Particular attention should be paid to location, taxes, wages, transportation costs, entertainment costs, rent/housing costs, and variable expense items such as food, clothing, and utilities. IV. Providing Financial Direction: Go through the steps of establishing financial direction. Your analysis should address (at a minimum) the following : a. A financial mission statement for yourself b. Identification of relevant environmental information c. Establishment of at least 4 goals d. Determination of at least 2-3 objectives for each of your goals paying careful attention to wants vs. needs (be sure to rank the wants) e. SWOT Analysis (assume that you have just landed your dream job but have not begun working) f. Formulate feasible alternative strategies being mindful to develop and evaluate ways in which you could increase your discretionary cash flows. g. Select the most appropriate strategy for each objective V. Investing and Retirement Planning: Assess your current savings rate. How much of your gross salary do you save and how do you save (i.e. 401K, savings account, CDs, brokerage account). Are you forgoing any funds through your employer matching program. If so, how much are you forgoing and if you take advantage of all of your employer matching funds, how much does this add to your annual savings rate? Assess your current investment approach. What is your current asset allocation between stock, bonds, cash, real estate, etc.? What was your overall rate of return this past year? Given current economic conditions, how are you going to rebalance your portfolio over the course of the next two years? Assess your current retirement planning needs. At what age do you hope to retire? What are your goals during retirement? Assume that at retirement you wish to have between 60-80% wage replacement ratio. Determine the percentage of income you will need to invest in order to meet this goal. Discuss the feasibility of this goal and the implications of not meeting this goal. What recommendations would you make for yourself to get as close as they possibly can to achieving this goal (your two options if you fall short are either increasing your savings rate or increasing your risk profile to earn a higher rate of return)?

5 GRADING BREAKDOWN Grading Assignment Assignments Discussion Board Case Study Mid- Term Examination Final Examination Total Points Available 100 COURSE SCHEDULE: Module 1: Completed by and Assignment 1 due June 1 Module 2: Completed by and Assignment 2 due June 8 Module 3: Completed by June 15 Module 4: Completed by and Assignment 3 due June 23 Module 5: Completed by June 22 Midterm: Take between June 22- midnight on June 29 Module 6: Completed by June 29 Module 7: Completed by and Assignment 4 due July 6 Module 8: Completed by July 13 and Case Study Due July 15 Module 9: Completed by July 20 Final Examination: Take between July 13- midnight July 20 NOTE: All DISCUSSION BOARDS (5 in total) will be posted on Sunday and will run until Thursday evenings of each of the first 5 weeks of the course. You will need to post your comments in the discussion board within that time frame.