An investor has a long time horizon and desires to earn the market rate of return. However, the investor will need to withdraw funds each year from her investment portfolio. The biggest constraint a planner would face with this client is a ________ constraint.

Question

Quizplus · Accepted Answer

The biggest constraint for this investor is the need for liquidity, as they will have to withdraw funds annually. This means that the portfolio must be structured to provide enough liquidity to meet those withdrawals while still earning a market rate of return. Tax and risk-tolerance may also be considerations, but they are not the biggest constraints in this scenario. Social constraints are not mentioned and not relevant to this situation.

An Investor Has a Long Time Horizon and Desires to Earn