IPS true or false

Deduct the first year of living expenses from investable asset base only if the withdrawal will be made immediately. If made at the end of the first year, then do not remove it from investable asset base.


what about a giant cash flow that’s like 20% of the total assets? say, a downpayment on a house?

if hes paying it immediately then yes. if not, then it is a future liquidity need

I would deduct anything payable within the next year.

bpdulog Wrote: ------------------------------------------------------- > I would deduct anything payable within the next > year. Agree

This isn’t always true though. If someone is expecting a large inflow that would cover the expense, then it’s not necessary to deduct anything from the investable portfolio. See Question 1.A.ii of Schweser practice tests, Volume 2, test 3, morning session (page 294.) The guy knows he’s going to spend X on a house soon, but in the answer they just cover the outlay for the house with other inflows he gets. If his inflows didn’t cover all of it, then yes I think you’d subtract out the balance.