let’s assume that the Griffin’s family has net savings (it means Annual Income > ongoing expenses).
Besides this, and to complicate candidates lives, they plan to build either a fund to pay daughter’s university fees, rather than paying off the left home mortgage or whatever can come up. The message here is however this : the sum of these one-off expenses can definitely be included under the liquidity requirements section OK?
Now : Should we reduce these one-bloody off expenses i.e. the liquidity requirements by the net savings?
According to what I understand it’s a NO
According to what a reasonable person would do it’s a YES.
I don’t remember which one, but I think there is a topic test on CFAI website where a widow wants to donate 3m to an engineering school, and she has 200k of savings, you are expected to use those savings when approaching liquidity requirement so I would say it is a YES. Where did you see it is a NO ?
In the above example the item set says the net saving was directly invested in their investment account and that’s what the forum agreed as main reason of not using the net saving. I was simply wondering if, in the event of significant negative events, this periodic investment cash flow could be simply readdressed to support the liquidity requirements? that would be reasonable and human.