PWM - 2 general questions

CFA Level III
#1

  1. If you have credit card debt, do you subtract that amount from investable assets or add it to the liquidity requirement? My guess is neither.

  2. If the person is a net saver, let’s so gross salary is 100k and he saves 30k per year. Do you add that the investable assets? Should you factor that in when you figure out the liquidity requirement? General statement on how you would treat net savings would be appeciated.

#2

  1. if you’re paying it off immediately then it comes off ur investable asset base. If ur paying it off in the future then it’s a liquidity need.

  2. the statement will say that they are adding it to their asset base. It does not net off in the liquidity requirement. The liquidity requirement is the net expense figure per annum.

#3

Very debatable and I think I too en countered conflicting and. My hunch would be deduct the debt and not include the same in return calculation. The opportunity cost of the debt servicing is always 0.

#4

Very debatable and I think I too en countered conflicting and. My hunch would be deduct the debt and not include the same in return calculation. The opportunity cost of the debt servicing is always 0.

#5

what pokhim said, budget for interst and principal payments though