For IPS questions about liquidity, if it doesn’t specifically say calculate, could we lose points if we don’t quantify the liquidity requirement?
- Joan’s portfolio needs to provide for her annual spending needs that will adjust for inflation for the foreseeable future
-Joan’s portfolio needs to provide a post-tax amount of $130,000, or ~$185,700 [130,000/ (1-.30)] pre-tax and will be adjusted for inflation going forward.
I have taken 10 mocks and have seen guideline answers showing both of the options I laid out. It doesn’t appear to be a “depends on the question” type thing as most of the IPS related questions are very similar.
What do you all do?
It’s my understanding that the first option is good unless they ask for the liquidity requirement for a particular year. Then it would be specific. I definitely could be wrong though.
Yeah, I hate these liquidity questions. I’m just going to state the need AND state the $ amount to be on the safe side. Especially if I’ve already calculated it as part of a return requirement question.
What stinks is if you try to err on the side of caution and end up making a bonehead move and write the wrong amount (which is what I did and what prompted this question).
I wish there was guidance on what the institute will score if, in my example, I accidentally write an incorrect amount which wasn’t needed anyway.