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- 2011-7-11
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- 2013-8-19
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Here are a couple rules I came up with from doing the Official Exams. Please add any other rules of thumb or corrections.
IPS
Decreases ability to take risk
1. Small amount of investable assets to support Jones in retirement relative to his spending levels.
2. No post-retirement EMPLOYMENT income. Aka human capital.
3. No further funds added to investable assets in retirement.
4. No participation in company or individual retirement plan.
5. Might have to pay for kid’s education
Decrease willingness to take Risk
1. Desire for preservation of real value of the portfolio
2. Preference to avoid losses.
3. Conservative nature of current investments.
Increases ability to take risk
1. Long time until retirement (25 yrs)
2. Flexibility to stop annual payments to charity
3. No debt
4. Only has to provide for himself
5. Large portfolio value relative to living expenses
6. Flexible retirement date
7. Set to receive large inheritance
8. Stable income
Increases willingness to take risk
1. Owns own business
2. Desire to retire early
3. Investing confidently in equities
4. For Foundation: Desire to increase value of real purchasing power
Return Calculations:
1. If asks for pretax income divide cashflows by (1-t)
2. Look for one-off expenses that will decrease the portfolio.
3. If cash withdrawal from pension account includes a penalty be sure to account for it
4. You have to adjust tax for “before-tax” but no tax adjustment for “after-tax”
5. You have to adjust returns for inflation for “nominal” but this is not needed for “real.”
Time
1. 15-20 Years considered long; less than 3 is short
2. Be sure to account for odd year. Such as current age 34. Retire at 60. 60-34-1 =25
3. Be sure to mention single or multi-stage
Liquidity
1. Inflation is not accounted for with liquidity as it’s short term requirement. It is accounted for in return requirement.
2. Mortgage payment should be included
Taxes
1. For constraint mention if portfolio has single stock that could have a large basis if sold
Unique
1. Value of house
Legal
1. If on board of directors |
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发表于 2013-4-1 14:10
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