BC_MBA_student

For Individual questions, Stalla suggested to do:

1) 5 (or less) constraints first (save time for doing return objective). then

2) Risk objective (ability / willingness /overall)

3) Return objective (ie calculation).


For Return objective, here is what I have been doing.

1) Setup the calculation format first. (Cash Inflows / Cash Outflows / Net cash Inflows or Outflows / Net Worth)

2) Time period ( ie the year before retirement and the first year of retirement)

3) Then I wil go back to each paragraph and pick the information by paragraph (ie tax rate / inflation rate / amount of inheritance) and filling in the calculation format that I setup in the very beginning. ( ie Salary / Tax / Mortgage / college education / donation / etc....)

4) Adjust the inflation rate at the end(if necessary).

5) Normally, the final return objective answer would be less than 10%.



Good or Bad approach to deal with this type of question????