CFA CFA Level 3 Retail IPS – Return objective calc

Retail IPS – Return objective calc

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    • adossa3
      Participant
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      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

    • Sophie Macon
      Keymaster
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      Hi @adossa3 – before I answer, have you taken a look at CFA Level 3 topic picks section? I wrote some guides on IPS questions…

    • sankrutimehta
      Participant
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      @adossa3: I do goof up at times at the return requirement part of the IPS…so if u figure out any standard rules do share them 😀

    • adossa3
      Participant
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      Hi, yep, saw the IPS tips – many thanks

    • Sophie Macon
      Keymaster
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      @adossa3 – I don’t think you should add excess salary to investible assets, unless explicitly said so (which is rare). Because they need liquidity as well and investments are usually long term.

      I don’t follow your 2nd question, care to explain more?

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