jmychasi Wrote: ------------------------------------------------------- > prockets - yes agree…just dont know if that’s > enough to put them into below…i think it was > either above or avg but definately not below don’t be so sure, for this kind of subjective questions, you will never know 
If my home was going to be foreclosed on because my portfolio didn’t generate enough income to pay, I would consider myself to have Below average ability to take risk.
Above for me gents
Originally chose AVERAGE but changed to ABOVE AVERAGE given that a further $750k was coming down the road and they had a long time horizon.
jamespucyk Wrote: ------------------------------------------------------- > Above for me gents i just started to feel 2x better.
git r done…ya but they could have bought the house with cash if they wanted to!
can you really plan for an inheritance? what if her parents live another 40 years?
Above, in view of 30 years and significant assets and more coming. Two reasons why ability gets adversely impacted - (1) portfolio returns are needed to cover mortgage. This is their primary residence so critical. (2) Salary covers their expenses and no more. If inflation or expenses increase faster than salary growth, or if they have to pay for their children’s education, they would be in doo doo.
CFAAtlanta, that’s pretty good reasoning, but what about the “requirement” of short-term bank deposits? is that only willingness and not considered for ability? that threw me…
prockets Wrote: ------------------------------------------------------- > CFAAtlanta, > > that’s pretty good reasoning, but what about the > “requirement” of short-term bank deposits? is > that only willingness and not considered for > ability? that threw me… it is definetly restriction as for their ‘floor’ value, but man it is like waaay below 10% cushion
CFAAtlanta Wrote: ------------------------------------------------------- > Above, in view of 30 years and significant assets > and more coming. > > Two reasons why ability gets adversely impacted - > > (1) portfolio returns are needed to cover > mortgage. This is their primary residence so > critical. > > (2) Salary covers their expenses and no more. If > inflation or expenses increase faster than salary > growth, or if they have to pay for their > children’s education, they would be in doo doo. Atlanta, considered the same point on the mortgage payment, however, thought about the fact that it wouldn’t grow with inflation and therefore would become less and less significant over a 30 yr time horizon and stayed with Above.
yeah, I stayed with above average. But we had to come up with two reasons why their ability is lower. The above two were only ones I could come up with. Oh, there was one more - source of wealth. They had never managed such large sum before, received it from their parents and hence, not experienced in managing risk. Fwck… I wrote too much… no wonder I am coming back to finish writing what I started this year. short term deposit - willingness to take risk, not ability to take risk. Crap, this could be bad… I read in Schweser - respect willingness if willingness is lower than ability. Respect ability if ability is lower than willingness. However, I think although low willingness was indicated, they had asked for growth to be able to retire comfortably.
question never asked about overall risk tolerance… it asked “Overall Ability To Take Risk”
Atlanta, You’ll be fine. your mistakes sound like minor ones. If you’re up at this hour writing comments on this forum, you’re already ahead of the curve, in a sense. try this goofy one on for size:0) I said that the possibility of paying for the kids college lowered the ability to take risk.
living with parents at the age of 30, just meeting your expenses from two incomes, kids might turn out as dumb as a rock and you are on the hook for tution - how is that above average? there was a table in CFAI that summarize how aggressive you can be at different levels of wealth. only the very rich can be aggressive at all stages of life and HNW at some. the rest can barely be average.
but they just got 750,000…
mmeridith Wrote: ------------------------------------------------------- > Atlanta, > > You’ll be fine. your mistakes sound like minor > ones. If you’re up at this hour writing comments > on this forum, you’re already ahead of the curve, > in a sense. > > try this goofy one on for size:0) > I said that the possibility of paying for the kids > college lowered the ability to take risk. I am just too distressed… this is therapeutic for me… I could have passed this exam… coulda woulda shoulda…
CFAAtlanta Wrote: ------------------------------------------------------- > mmeridith Wrote: > -------------------------------------------------- > ----- > > Atlanta, > > > > You’ll be fine. your mistakes sound like minor > > ones. If you’re up at this hour writing > comments > > on this forum, you’re already ahead of the > curve, > > in a sense. > > > > try this goofy one on for size:0) > > I said that the possibility of paying for the > kids > > college lowered the ability to take risk. > > I am just too distressed… this is therapeutic > for me… I could have passed this exam… coulda > woulda shoulda… I agree - cheaper than $99 bucks an hour, or whatever the going therapy rate is. sleep helps too…signing off ;0} zzzzzz
nailit Wrote: ------------------------------------------------------- > living with parents at the age of 30, just meeting > your expenses from two incomes, kids might turn > out as dumb as a rock and you are on the hook for > tution - how is that above average? > > there was a table in CFAI that summarize how > aggressive you can be at different levels of > wealth. only the very rich can be aggressive at > all stages of life and HNW at some. the rest can > barely be average. What about the fact that Ms. Carvalho was expected to inherit “substantial wealth” at her parents’ death? J
Ok so you’re counting on an unexpected event? And they do not have a sizeable asset base. 995K is nothing considering they have a 600K mortgage liability and they don’t have help for another 10 years. If their portfolio comes up and short and they have to liquidate to pay for the house, they won’t have much left. Put yourself in their situation and tell me if you would put most of your money in equities or in tax-exempt muni bonds. Below FTW.