In the first of the PM cases in the 2006 exam from CFAI, where the soccer player is described (Rodolfo Serra), it asks for the time horizon. Serra will retire in one year (at age 35), and he has to pay support for his son until age 18 (now 7). My answer for Time horizon: 3 stages Stage 1: until retirement (age 35), as income will cease Stage 2: until son gets 18 (age 45), as expenses are reduced Stage 3: until death However, the solution by CFAI only identifies 2 stages, and does not consider the 1 year until retirement. Has anyone noted this? Why would the first horizon be left? Would you consider time horizons if they are very short (< 5 years)? I have seen examples where the expenses for the next 4 years are discounted and subtracted from the portfolio value.
actually, that’s another spoiler. they intended that you determined the IPS from the DAY of his retirement, thereby skipping YOUR stage 1
what about stage after death, do you only consider it when the case specifically says that the person wants to leave money for charity/family/whatever after death?
mwvt9 clarified this in another post yesterday that unless there is no specific mention of creating a trust, etc we can safely leave the after death time horizon. you cna check the below threads http://www.analystforum.com/phorums/list.php?13 http://www.analystforum.com/phorums/read.php?13,933148,933825#msg-933825
you do not count after death as a stage because the portfolio is managed during retirement with consideration to the persons goals once they die