include on-going living expenses in liquidity constraint? 学会

jcole21

I've seen it there at times on some exams and on others it's not there at all. Should you just be safe and put all outflows from the portfolio in the liquidity requirement or only major outflows?

ll11

Remember that liquidity is cash oriented or short term oriented

Returns could be rebalancing or total return approach , also could mean an ending value needed e.g TVM calculation given initial , spending and time horizon

Slightly different things implied , even if they arise from same/similar need. In Liquidity part you just state what needs to come out of portfolio ( e.g. if portfolio NOT providing living expense then no Liquidity needed for living expenses)

susana

so nothing is ever included in return that is not included in liquidity?

return gets living expenses and immediate liquidity needs

liquidity gets long term liquidity needs, living expenses, and immediate liquidity needs

Iginla2011

good one bell

Analyze_This

U referring to Return objective which can be canned in this manner a la Schweser

For liquidity , I'll go simpler like "Needs $xxx for yyy needs in 3 years " etc.

infinitybenzo

Do you guys have a general statement that you consistently use for these? Obviously they all differ but generally it's either maintain real value of portfolio through retirement or maintain real standard of living through retirement, cover after-tax living expenses on an inflation adjusted basis etc.

NakedPuts2011

show is correct: u definitely should not include calculation pieces in liquidity I think. Just mention , regurgitate or paraphrase things that look like liquid needs , hopefully one or two outstanding things , no need to think deeply

PalacioHill

That's how I feel the show, if it's at death, then leave it out.

Chuckrox

The charity piece can even go into "ability to take risk" e.g. 2007 Morning.

They have a charitable objective which they can give up , so higher risk taking ability.

I think you have to stretch the imagination and come up with creative things like that

mik82

My inclination is to put it into unique , unless I run out of things to write for liquidity