individual liquidity constraints vs return objective objective

yuoska

What is the general rule of thumb for including an anticipated expense as a liquidity constraint for an individual ips? Does it have to occur within a certain time horizon?

strikethree

I think 1yr would be the horizon

Iginla2011

So if you expect to make a 100k investment in 2 years, or your kids start college in 2 years, how do you incorporate that into an IPS?

ll11

Say liquidity requirement for the next year is _____. In the following year, your client must be aware to keep $X liquid for when his kid starts college.

That simple.

Valores

Right, but what if the kid wont start college for 2-3 years. is it considered a liquidity constraint in this IPS?

infinitybenzo

I don't think so. Isn't the IPS supposed to be reviewed on a regular basis. lets say annually.

lcai

I certainly don't think you lose points for including a 2-3 year out known expense.

dyga

probably not. but i wouldn't take the chance of comingling it in with the liquidity figures for the 1yr horizon.