Case #2 – Balwinder and Kofi Mensa

Balwinder and Kofi Mensa have been married for eight years. They have a son, named Aditya and a
daughter named Ulyssa. The family has lived in a house at 27 Northampton Street in Brampton, Ontario
L6S 3Y8 for two years.

The family’s birthdates are:

Balwinder: June 24, 1989

Kofi: December 31, 1987
Aditya: March 29, 2019
Ulyssa: September 4, 2022.

Balwinder and Kofi each have $90,000 in TFSA contribution room available. Balwinder has carryforward
RRSP contribution room of $78,098, while Kofi has none.
Balwinder and Kofi have three goals.

First, each of them would like to retire on their 65th birthdays. They want to maintain their current
lifestyle.

Second, the couple would like to fully fund both of their children’s post-secondary educations at an
expected cost of $20,000 in today’s dollars. They expects to need these cash flows at the start of each
year for four years, starting when Aditya and Ulyssa are 18, respectively.

Finally, Balwinder and Kofi would like to save enough money to take their kids to Disney World in three
years. They expect that they will need $10,000 for the trip. They haven’t started saving for this trip yet.
Balwinder earns a gross annual salary of $104,000 as an audiologist and speech pathologist and
generally gets cost of living adjustments each year to keep up with inflation. She gets paid bi-weekly.
Kofi is an actuary for an insurance company and earns $102,000 gross per year, also indexed to inflation.

The couple keep approximately $20,000 in their chequing account for monthly expenses and
emergencies. This account earns no interest. The couple have two cars, both fully paid for. Balwinder’s
five year old vehicle is worth $15,000 and Kofi’s brand new car is worth $45,000. They like to purchase
new cars every ten years at a cost of $45,000. The couple have an RESP for each of their children. They
contribute $2,500 to each RESP each January 1 to maximize the grant they can receive from the
government. Currently, Aditya’s RESP has a market value of $18,987, while Ulyssa’s RESP has $5,691
invested in it. Each account is invested in 25% Canadian large cap equities, 25% U.S. equities, 25%
international equities and 25% global bonds.

Balwinder has an RRSP which she maximizes her contributions to each year. She only recently started
contributing to the plan as she and Kofi used a large chunk of their savings to purchase their current
house. Balwinder has $32,567 invested in her RRSP. Her RRSP is invested in 42% large cap Canadian
equities, 50% U.S. equities, and 8% global bonds. Kofi has a group RRSP through his work that has a
current market value of $190,023. He maximizes his contribution every year and so has no carryforward
RRSP contribution room available. Kofi’s RRSP is invested in 24% large cap Canadian equities, 22% U.S.
equities, 31% international equities and 23% global bonds.

The couple’s only debt is their mortgage. They bought their house for $680,000 in January of 2019 with
a mortgage of $400,000. Their current mortgage rate of 3.5% is fixed for the next three years. They
currently owe $377,633 on their mortgage, which has 23 years remaining in its amortization. Their
monthly payment is $1,989.

The couple have the following expenses each year:

• Property taxes of $8055 (Annual)

• Travel expenses of $5922 (Annual)
The couple have the following expenses each month:
• Housing costs, including utilities of $670.
• Food and housing supplies of $1,236.
• Transportation expenses of $1,421.
• Cable TV, Internet, and Cell Phones of $361.
• Childcare expenses of $2884.
• Personal expenses of $361.
• Entertainment of $236.

Balwinder and Kofi both have group life insurance policies through their respective employers that will
provide three times their annual salary in life insurance proceeds upon either of their respective deaths.
Balwinder’s short-term disability policy will pay 80% of her income for 88 weeks, after a 16 week waiting
period, while her long term disability policy will pay 50% of her income after a two year waiting period.
Kofi’s short-term disability policy will pay 50% of his income for five years after a one month waiting
period. He has no long-term disability policy.

The couple’s answers to their investment questionnaire are available in the Week 2 Resources folder on
Blackboard. They expect to pay a 1% non tax deductible annual fee for money management.