Private Wealth Management Flashcards
1
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To maintain real value pf portfolio, the required real after-tax return is calculated as:
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Annual after-tax withdrawal from the portfolio /
Asset Base
2
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formula to convert after-tax withdrawal to a pre-tax withdrawal:
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Pre-tax withdrawal = After-tax withdrawal /
(1 - Tax rate on withdrawals)
3
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Nominal Return =
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Real return + Inflation rate
4
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Worksheet to use if an investor wishes to grow portfolio
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TVM worksheet, used to compute I/Y over investment horizon
5
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Risk Tolerance
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- Above average ability if longer time horizon or large asset base compared with needs
- Willingness based on psychological profile
- Overall tolerance is a combination of ability and willingness
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Time horizon constraint
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length and number of stages
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