Most advisors and PM's will use silly 4% rules to determine cash availability. This isn't sufficient and creates cash drag and poor allocation decisions. A combination of their spending, pension income and portfolio distributions is the basis of the portfolio allocation decision. Second is a decision around layering the most tax efficient products to ensure the portfolio is still capitalizing on long-term opportunities and compounding. Never sacrifice now for the future.
Crafting the Perfect Liquidity Level for Your Investment Portfolio When evaluating the appropriate level of liquidity for a client's investment portfolio, several factors come into play. Firstly, I assess the client's financial goals and time horizon. Short-term goals necessitate higher liquidity, while longer-term goals can accommodate less liquid assets. Next, I consider the client's risk tolerance and overall financial situation. A conservative investor may prefer more liquidity for safety, while a more aggressive investor might prioritise higher returns over immediate access to funds. Lastly, I analyse market conditions and economic trends to ensure the portfolio's liquidity matches potential needs and opportunities. Overall, a balanced approach tailored to the client's specific needs and circumstances guides my decisions on liquidity levels in investment portfolios.