Retail IPS – Return objective calc

Hey there!

Am mucking up the return requirement – cant think straight any more!

Shouldn’t one add any after-tax salary less living expenses to investible assets for the return objective calculation ? I understand in most cases, after-tax or before-tax salary/income is always equal to living expenses, so there is no investible asset to earn on. But where after-tax salary exceeds living expenses, should it be added to the Investible Assets figure ?

2) all immediate spending and liquidity needs go in the numerator / Investible assets, for the required return calculation – correct ?

Thanks very much
Aaliya