标题: simple Q: IPS, do I include the cash reserve in the rate calculation? [打印本页] 作者: brain_wash_your 时间: 2011-7-13 16:25 标题: simple Q: IPS, do I include the cash reserve in the rate calculation?
e.g.
A wants to have 3 mth salary for emergency cash, (i.e. 30,000)
A has total of 1M
A needs 20000 per year for expense
Shall i do:
1. 20000/1M
or
2. 20000 /(1M-30000)?作者: Iginla2011 时间: 2011-7-13 16:25
1 dude, for the win作者: NakedPuts00 时间: 2011-7-13 16:25
1
When you pick portfolio though make sure that it has 3 months cash.作者: Analyze_This 时间: 2011-7-13 16:25
obviously though you need to raise it to e(1-r) and then divide by 2 to account for the semi annual compounding作者: nannan66 时间: 2011-7-13 16:25
why 1?
shudnt it be 2?作者: PalacioHill 时间: 2011-7-13 16:25
cfatime.... why not 2?作者: wake2000 时间: 2011-7-13 16:25
Definitely 1.
emergency cash for 3 months is a liquidity constraint that you will consider in portfolio allocation作者: strikethree 时间: 2011-7-13 16:25
Not 2 because the 30K is not an immediate outflow that needs to be satisfied from the 1M investable asset portfolio.
It just means that from the 1M available to invest and allocate to different asset classes that 30K of it must be allocated to assets that are very liquid i.e. cash and money market instruments.
The 30K is NOT reducing the investable asset base..作者: bodhisattva 时间: 2011-7-13 16:25
oops my bad! i interpreted as him needing cash RIGHT NOW to spend and not as an emergency/liquidity requirement.
thanks作者: bboo 时间: 2011-7-13 16:25
Because "cash" is not actually in cash, it's cash instruments (Inc treasuries) which are highly liquid and earn a yield. That's why.
