Return objective

Do you have any suggested approach to construct the Return Objective in the IPS. i am trying and practicing it but dont come anywhere close the the suggented answers.

Is there a checklist that i can follow?

Got any checklist that i can follow?

I’m in the same boat as you. I’m taking most of the day today to re-do all past AM IPS questions. It seems like I always add something or don’t add something that throws off my return calc. The worst part is that there doesn’t seem to be a whole lot of consistency between years either.

I don’t have a great checklist, but its helpful to make list of their asset base, expenses, and income when reading the question, and then go from there

the “first year” part always throws me off

dude…there aint no checklist that i am aware of… They WILL try to screw you.

The only thing you can do is practice all the IPS questions you can.

I find writing A L I E at the top of the question the easiest thing to do. Assets, Liabilities, Income, Expenditure. Then I workout the net expense post tax, this is not only my liquidity need but also then return that i need.

A - L is obvious, but be careful for taxes on assets or expenses. Make sure you keep cash in the portfolio, even if they say (put some aside for a rainy day).

Then do you net expense / net asset = real after tax return. Then it’s about if their asking for nominal after tax, or just nominal etc…

All the best!! Do the questions and follow my method and it will start to click…

This has been a problem for me as well. Because there’s never a clear answer. Always subjective.

For the return objective though, for me, i realize that it’s always:

  • Taken from a total return standpoint

  • intended to meet some future liability (e.g. retirement exp., pension payments, claims etc.)

  • intended to protect against inflation

  • emphasizes growing assets, protecting assets or producing income (total return is still considered as it is never only one of these)

Just my opinion.