Mary Smith, an unmarried 55-year-old schoolteacher, wants you to manage her nest egg which consists of...

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Mary Smith, an unmarried 55-year-old schoolteacher, wants you to manage her nest egg which consists of $500,000 in savings. This sum is in several savings accounts at local banks. She says she doesn't really trust the School District's pension fund- "too many gyrations," so she has chosen not to participate in it. Mary loves teaching and wishes to retire at age 76. She believes she will follow the lead of her mother who was 90 when she passed away. She will be perfectly happy with a modest retirement income of $60,000 per year (from her future portfolio), supplemented by her Social Security, projected to be about $15,000 per year (in addition to portfolio income). She has expressed a wish to leave $1,000,000 (adjusted for inflation!) of money to her niece, whom she adores, when she passes away. She does worry a bit, though, about this "inflation thing" that she heard about on a recent "60 Minutes" show. She can probably manage to save another $10,000 per year until she retires. What are the constraints (Liquidity, Time horizon, Taxes, Legal and regulatory environment, Unique Circumstances) when writing an IPS? Mary Smith, an unmarried 55-year-old schoolteacher, wants you to manage her nest egg which consists of $500,000 in savings. This sum is in several savings accounts at local banks. She says she doesn't really trust the School District's pension fund- "too many gyrations," so she has chosen not to participate in it. Mary loves teaching and wishes to retire at age 76. She believes she will follow the lead of her mother who was 90 when she passed away. She will be perfectly happy with a modest retirement income of $60,000 per year (from her future portfolio), supplemented by her Social Security, projected to be about $15,000 per year (in addition to portfolio income). She has expressed a wish to leave $1,000,000 (adjusted for inflation!) of money to her niece, whom she adores, when she passes away. She does worry a bit, though, about this "inflation thing" that she heard about on a recent "60 Minutes" show. She can probably manage to save another $10,000 per year until she retires. What are the constraints (Liquidity, Time horizon, Taxes, Legal and regulatory environment, Unique Circumstances) when writing an IPS?

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Introduction An Investment Policy Statement IPS is a crucial document that outlines an individuals or an entitys investment goals objectives constrain... View the full answer