Why don’t have to take inflation into account when calculating the liquidity requirement?? E.g. management fees = usd 105,730,000 x 0.004 x 1.035???
Management fees are a percentage of market value. There’s no need to adjust for inflation since it’s a direct calculation.
Thanks man! So this also applies to the 6% spending requirement?
Yes, it’s also a percent of market value (as of Dec 31), so it’s a direct calculation and no need to adjust for inflation.
In this case the inflation only comes into play when determining the return requirement.
Many thanks!