Distinguishing liquidity constraints for an IPS
When a question asks to prepare the liquidity constraints for an IPS for a individual client, which of the following do we consider (or do we consider both)?
1. Withdrawals from the portfolio’s investable base in 6 months to meet some one-off large expenses, such as repayment of housing mortgage loan in full.
2. Annual living expenses, which could be funded from the portfolio’s normal returns.
Thanks in advance!