really quick guys/gals,
So i got this WRONG because my answer was 50k, and not the guideline answer of 85k. the difference comes in the form of the fact that the couple is a “net saver” of 35k per year.
It was to MY UNDERSTANDING, that being a “net saver” should INDEED be factored into the liquidity requirement, even though savings are a SOURCE and not a NEED for liquidity
this is what CFAI says Note: The Crusoes’ ongoing expenses of USD 100,000 per year (USD 135,000 after-tax income less USD 35,000 annual savings) are not included as a component of the liquidity requirement. The Crusoes are net savers, and thus ongoing expenses do not create a liquidity need from the portfolio.
the question asks for their liquidity REQUIREMENT, so how is 50k incorrect? doesnt net savings REDUCE the liquidity requirement needed from the port, how the HECK is the answer 85k adn not 50k here
please advise