Week 1 ch. 1,8,9,10 Flashcards
What are the Financial planning process steps?
1- establish and define the planner-client relationship 2- father data 3- analyze data 4- develop and present a plan 5- implement the plan 6- monitor the plan
Quantitative data
- family profile and compensation
- assets and liabilities
- insurance and benefits
- wills and trusts
Qualitative data
- Goals and objectives
- expectations and risk tolerance
- employment changes
- quality of life
Elements of a comprehensive financial plan
- Identify personal data
- goals and objectives
- identify problems
- compile: balance sheets, tax info, debts, assets
- exposure to losses and ins needs
- tax burdens and sheltering of estates.
Financial goals (ordered)
Asset/debt planning Risk mgt/ insurance Inv planning Tax planning Retirement planning Estate planning
Jobs of the Fed Reserve
1- maintain price levels
2- maintain long term economic growth
3- maintaining full employment
Discount rate
Borrowing rate from the federal reserve
Federal funds rate
Lending rate between member banks
CPI- Consumer Price Index
Weighted average measuring the change I prices paid for goods or services for a specific time period.
PPI- Producer Price Index
Measures the change in selling price over a period of time.
Measure of price changes on the whole output of producers. (Raw materials used in the manufacturing process)
Nominal vs real interest rate
Nominal- measures the yield in dollars per year the dollar is invested
Real int rate- nominal int rate adjusted for inflation.
GDP formula
GDP= consumption + investment + Gov spending + (exports - imports)
Participating/Dividend payment options on Life Ins
1- receive in cash 2- left alone to accumulate interest 3- used to reduce premium 4- used to (PUA) pair up additions 5- “the 5th dividend option” used to purchase one yr term additions to increase face amount.
