章節(jié)3-私人財(cái)富管理ss任務(wù)1講義04.v4cfa三級(jí)

【夢(mèng)軒考 專業(yè)提供CFAFRM全 SS4-5PrivateWealth【夢(mèng)軒考 專業(yè)提供CFAFRM全 TopicinCFALevelSS1-SSSSSSSSSSSSSSSSSSSSSSRISKSSSSSSSS2-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SummaryofReadingsandSS4PrivateWealthRR ManagingIndividualInvestorRR

TaxesandPrivateWealthManagementinaGlobalEstatePlanninginaGlobalSS5PrivateWealthRR

LifetimeFinancialAdvice:HumanCapital,AssetAllocation,3-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講ThePortfolioManagementCreatetheinvestmentpolicystatement(IPS)–formal allinvestmentdecisionmaking,withacentralroleinthewholeportfoliomanagementprocessFormalizecapitalmarketCreatethestrategicasset position(portfolioPortfolioimplementation(tradingEvaluation,monitoring,&4-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講ThePortfolioManagementProcess—realvs.pre-vs.post-taxRiskability&

TimeLiquidityUniqueR TTLL5-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講ProfilingIndividualInvestorsSourceSourceofEntrepreneurialactivity(actively,normallyabove-averagewillingnesstotolerateInheritance,one-timewindfalls,builtupoverlongperiodsofemployment(passively,below-averagewillingnesstotolerateMeasureofPositivecorrelationbetweenlevelofrisktolerance&client’sperceptionofwealthStageoflife:(typicallyreducedwillingnesstotakerisk)FoundationAccumulationMaintenanceDistribution6-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講ProfilingIndividualInvestorsBridgesBridgesgap&behaviouralDecisionsbasedmainlyonDecisionsbasedmainlyonRelyonhardDecisionstendtoconservativeinCanover-yse,butoncetohavelowturnover&LessNotafraidofmakingHaveconfidenceintheirhardHighturnover&tradingRiskless7-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講Return RRReturnRequiredAssetMaintaintheinflation-adjustedAssetSpecificCashFlowSupport…Desired8-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講Risk RRRiskRiskobjectiveTimeTimehorizon&abilitytotakeriskpositivelyPortfoliosize&abilitytotakeriskpositivelyGoalimportance&abilitytotakerisknegativelySpendingneeds&abilitytotakeriskFlexibilitycanincreasetheabilitytotakeAssetturnover&investmentbetweenwillingness&ability,followthenarrowerofthe9-Isinvestorataxpayer?WhetherIsinvestorataxpayer?WhetherannualportfolioreturnssubjecttotaxationAlwaysstrivetominimizecurrent(e.g.,lossharvesting,long-termyieldtypesofe,capitalIftaxtreatmentmendationforlegalInvestmentConstraints RRTimeTimeNewtimehorizoneachtimeanpriortoretirement/postLengthofeachtimehorizonisOtherindividualscaninfluencetime10-【夢(mèng)軒考 專業(yè)提供CFAFRM3.3InvestmentConstraintsRRLegal&Legal&Typicallyrelatetotaxreliefandwealth altrustBalancetheinterestsof beneficiaryandLegalcounselisHowquicklyanassetcanbeconvertedintocashwithoutalossinvalue.Focusisonneedforcashintheshortterminexcessofcashin-flowsfromearningsorportfolio UniqueUniqueRestrictiononthesaleofSpecificallyforbidsorlimitsbasedonpastAssetsheldoutsidetheinvestableDesiredmedicalexpensesforlovedMajorplannedoutlays(vacation,newEmergencyneeds:3-6mlivingexpenses(medicalexpense,uninsuredlosses,11-SratiorSratiorChoosingtheOptimalAssetYouaresometimesgivencharacteristicsfor5or6portfoliosandaskedtoselectthebestportfoliofortheclient:SelectionbyaprocessofSelectionbyaprocessofThosethatfailtomeettheafter-taxThosethatviolateshortfallstatement(usuallyexpressedas umallowableloss)usingsafetyfirstruleAnyallocationthatfailstomeetAlwaysminimizecash(3-6months’livingUseSharpetochoosebetween12-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講MonteCarlosimulationisflexibleandtheadvantagesItconsiderspathconsideraninvestorrequiringaGBP25,000peryearwithdrawalforlivingfromportfolioofButsupposeverypoormarketsleadtoadeclineintheportfolioof50%.Thewithdrawalneed esamuchlargerportionoftheEvenifthemarketsrecover,thediminishedportfolioissmallerifthewithdrawalcomesatalowpoint.Thiscouldpermanentlydiminishthelivingstandardoftheinvestorduetotherandomdeclineinthemarket.Pathdependencycouldalsoconsiderissues,suchastheinteractionofinflationontheportfoliovaluesandontheinvestor'swithdrawalItcanmoreclearlydisplaytradeoffsofriskandThe10,000pathscanberankedfrombesttoworsttoassesstheprobabilityof easwellashowmuchbetterorworseitcoulditProperlymodeledtax ysis,whichconsiderstheactualtaxratesoftheinvestoraswellastaxlocationoftheassets(heldintaxableortax-deferredlocations),canbeassessed.Howthetaxburdenchangeswithmarketreturnsandwithdrawalscouldbe13-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講3.5MonteCarlosimulationisflexibleandtheadvantagesAclearerunderstandingofshort-termandlong-termriskcanbeForexample,reducingtheholdingsofriskystockwouldreducetheshort-termvariabilityoftheportfoliobutincreasethelong-termriskofnothavingsufficientItissuperiorinassessingmulti-period ysisprojectsportfolioreturnasasimpleweightedaverageoftheassetreturns,geometricallycompounded.Risk(variance)isthetraditionalformulataughtintheCFAcurriculum.MonteCarlosimulationcanbettermodeltherealstochasticprocesswherereturnovertimedependsnotonlyonthestartingvalueoftheperiodbutalsoontheadditionsorwithdrawalstotheportfolioateachfutureperiod.Pointsalongthetimelinecanbeconsideredtoanswerquestions,suchas,"Doneedtobeincreased?""CanIretireearlier?""MustIretire14-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講3.5MonteCarlosimulation–MonteCarlosimulation–Simplisticuseofhistoricaldata,suchasexpectedreturns,fortheinputs.ReturnschangeandhaveamajoreffectonprojectedfuturevaluesoftheModelsthatsimulatethereturnofassetclassesbutnottheactualassetsheld.SimulatingthereturnoftheWilshire5000whenafundwithfeeswillbeheldcouldsignificantlyoverstatethefuturevalueortimeperiodoverwhichdistributionscanbesustained.Realassetshaveexpenses.Taxmodelingthatissimplisticandnottailoredtotheinvestor's15-【夢(mèng)軒考 專業(yè)提供CFAFRM全 4stepstoformulateindividual’s66stepsto alRenewtheobjectives

Cashflow Risks16-【夢(mèng)軒考 專業(yè)提供CFAFRM全 Investor’sIPS-InvestorclassifyalSourceofEmployeewithannualOwninvest-ableassetSizeofThereisone-timewindfall,sizeisorsizewillbeStageofThepre-retirementperiodisThereisalsotheperiodafterWithchildren–educationWithmortgage–liquidityWith17-【夢(mèng)軒考 專業(yè)提供CFAFRM全 4.2Investor’sIPS-ReturnobjectivesalAssetAlwaysjustbysalaryin

CashflowSupportlivingexpense(nowandSupportmortgage–liquiditySupportparents’living18-【夢(mèng)軒考 專業(yè)提供CFAFRM全 4.2Investor’sIPS-Returnobjectives—Cash ysisCashCashLivingDownpaymentatDonationjustonT0orfromT0toOtherone-timeneedNetcashNetCFatT0>0,asapartofNetCFfromT1<0,astheliquidity19-【夢(mèng)軒考 4.2Investor’sIPS-ReturnCalculational

專業(yè)提供CFAFRM全 RRNetCFsatrRNetCFsatT1 NetCFinatExcludingthehouseandotherunavailableRealNominal20-【夢(mèng)軒考 專業(yè)提供CFAFRM全 4.2Investor’sIPS-Returnobjectives—CashSS*Trust/G0TotalS*S*S*(1+f)*LivingLL*DownD0Mortgage0CharityC0Otherone-timeT0TotalS*t+L+D+C+S*(1+f)*t+L*(1+f)+NetcashTotalin–TotalTotalin–Total21-【夢(mèng)軒考 專業(yè)提供CFAFRM全 Investor’sIPS-Returnobjectives—Cash Mainissue:RenewreturnobjectiveclosetoRe-calculatethenetCFneedannually→Re-calculatetheassetbasenow→Calculatethetargetassetvaluewhenretire→Calculatetherequiredrateofreturn→I/YNewobjectives:SupportlivingexpenseinSupportdonatingmoneytoProvideinheritancefor22-【夢(mèng)軒考 專業(yè)提供CFAFRM全 Investor’sIPS-Risk

alAbility-TheyhavealongtimeTheyareyoung,withmorehumanTheymaygetinheritanceinTheirjob eareTheirhealthinsuranceisAbility-After-taxsalarycannotcoverlivingSustainedCashflows(Mortgage)mustbeAssetbaseisOtherBasedon“……”intheThenarrowone23-【夢(mèng)軒考 Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsessionQUESTION1HASFOURPARTS(A,B,C,D)FORATOTALOF36RobertoandMarianaCarvalholiveinalargecityinBrazilwiththeirtwochildren,agesfourandtwo.Robertois30yearsoldandMarianawillbe30yearsoldlaterthismonth.RobertoisamanagerinamanufacturingfacilityandMarianaisamusicianinthelocalsymphonyorchestra.RobertoandMariana’sannualsalariestotal120,000Brazilianreais(BRL)aftertax.Theirsalariesjustcovertheirlivingexpenses.Theaverageannualinflationrateisfourpercentandtheirsalariesandexpensesareexpectedtoincreaseatthisrate.Theyarehealthyandbelievetheirjobsandearningpotentialaresecure.TheCarvalhos’dividends,andinterestaretaxedat20percent,andcapitalgainsat15Mariana’sparentshavesignificantwealthandfundedanirrevocable altrustforher.Brazilhasawealthtransfertaxthatappliestotransfersintotrustsandtoinheritances.BrazilhasadoptedthePrudentInvestorRulefortheadministrationoftrusts.ThecurrentvalueofthetrustisBRL1,500,000.24-【夢(mèng)軒考 專業(yè)提供CFAFRM全 4.4Investor’sIPS

2008CFAlevel3morningsessionThetermsofthetruststatethatwhenMarianareachestheageof30,shewillreceiveatax-freedistributionofhalfthevalueofthetrust.Thebalanceofthetrustwillremaininvestedandwilldistributeintotaltoherwhenshereachesage40.Sinceshedoesnothaveaccesstotheremainingbalancefortenyears,thisbalanceisnotconsideredapartoftheCarvalhos’investableassets,butispartoftheirtotalnetworth.Inaddition,Marianaexpectstoinheritasubstantialsumofmoneyuponthedeathofbothparents.TheCarvalhoshaveBRL500,000ininvestableassets,currentlyallinshort-termbankdeposits.Itistheirintentiontomaintainatleastthisamountininvestableassets,onaninflation-adjustedbasis,inthefuture.TheCarvalhoscurrentlylivewithMariana’sparents,butarenowpurchasingahome.ThepurchasepriceofthehomeisBRL850,000.Thedownpaymentis30percentofthecostofthehomeandwillbefundedfromthetrustdistribution.TheCarvalhoswilltakeoutafixedratemortgageforthebalanceofthepurchaseprice.Theafter-taxmortgagecostwillbefixedatBRL55,000(principalandinterest)annuallyfor30years,withthefirstannualpaymentdueoneyearfromnow.25-【夢(mèng)軒考 4.4Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsessionTheCarvalhos’immediateinvestmentgoalistohavetheirinvestmentportfoliothecostofthemortgage,whilemaintainingtheportfolio’sinflation-adjustedvalue.Theyplantoretireattheageof60andtheirlong-termgoalistohaveaninvestmentportfoliothatwillprovideanannual ecomparabletotheircurrentsalariesadjustedbyinflation.TheirfamilyhealthinsuranceisprovidedbyRoberto’semployer,bothnowandinretirement.Theyarehopefultheirtwochildrenwillattendthelocaluniversityatnocost.Theuniversitydoesnotchargetuitionfeesforqualifiedstudentswhopassitsentranceexam.Thosewhodonotpasstheexamarerequiredtopayfulltuition,whichishighrelativetotheCarvalhos’livingexpenses.Inordertomeettheirinvestmentgoals,theCarvalhosrealizetheyneedtoconsiderinvestmentsotherthanshort-termbankdeposits.TheCarvalhoshireLuizOliveira,CFA,tomanageaninvestmentportfoliothattheywillfundwiththeirBRL500,000inbankdepositsandthenetproceedsofMariana’strustdistributionatage30.26-【夢(mèng)軒考 4.4Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsessioni.PreparethereturnobjectivesportionoftheCarvalhos’investmentpolicystatementii.Calculatetheafter-taxnominalrateofreturnthatisrequiredforthenextyear.Showyourcalculations.(12minutes) IdentifytwofactorsintheCarvalhos’situationthatincreasetheirabilitytotakeIdentifytwofactorsintheCarvalhos’situationthatdecreasetheirabilitytoDeterminewhethertheCarvalhoshavebelow-average,average,orabove-abilitytotakePreparethefollowingconstraintsoftheCarvalhos’Time PreparethecurrentreturnobjectivesportionoftheCarvalhos’ii.Calculatetheafter-taxnominalrateofreturnthatisrequiredfortheShowyour27-【夢(mèng)軒考 4.4Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsessionThereturnobjectivefortheCarvalhos’portfolioisprovideforthemortgagepaymentsforasupporttheirlivingexpensesinmaintaintheinflation-adjustedvalueofthe28-【夢(mèng)軒考 4.4Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsession29-【夢(mèng)軒考 3.7Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsession30-【夢(mèng)軒考 3.7Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsession31-【夢(mèng)軒考 3.7Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsessionTwenty-fiveyearshavepassed.TheCarvalhosarenow55yearsoldandtheirtwochildrenaregrownandfinanciallyindependent.Mariana’sparentspassedawayearlierthisyearandleftheraninheritanceofBRL8,000,000after-tax.TheCarvalhoshavefiveyearsremainingontheirmortgageandtheBRL55,000annualmortgagepaymentwillcontinuetobefundedfromtheirinvestmentportfolio.Theyintendtoworkanotherfiveyearsandthenretireatage60.Theirsalariesareexpectedtocontinuetocovertheirlivingexpensesuntilretirement.Theirinvestmentportfolio,includingtheinheritance,nowtotalsBRL10,200,000.TheCarvalhosexplaintoOliveirathatinretirement,theywouldliketomaintaintheircurrentstandardoflivingandstartaregularprogramofdonatingmoneytotheirfavoritecharities.TheyalsohopetoleaveaninheritanceofBRL5,000,000toeachoftheirtwochildrenattheirdeath.OliveiracalculatestheywillneedaportfoliovalueofBRL15,000,000whentheyretireinordertosupportthesegoals.32-【夢(mèng)軒考 3.7Investor’sIPS

專業(yè)提供CFAFRM全 2008CFAlevel3morningsession33-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SummaryofReadingsandSS4PrivateWealthR ManagingIndividualInvestorRR TaxesandPrivateWealthManagementinaGlobalR EstatePlanninginaGlobalSS5PrivateWealthRR

LifetimeFinancialAdvice:HumanCapital,AssetAllocation,34-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講OverviewofGlobalTaxationTherearethreeprimarycategoriesofTaxes Paidbyindividuals,corporations,andotherlegalentitiesonvarioustypesofeincludingwages,interest,dividends,andcapitalWealth-basedPaidonthevalueofassetsheldandonwealthTaxesonSalestaxes:PaidbytheValue-addedtaxes:Paidateachintermediateproductionstepaccordingtotheamountofvalueaddedatthestep;ultima ybornebytheconsumer(addedintothepurchaseprice).35-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講GlobalTaxationRegimes—CommonTaxregimesaregenerallyclassifiedasflatorprogressive.Inaprogressivesystemthetaxrateincreasesasthelevel eInmosttaxjurisdictions,ataxratestructureappliestoordinary e(suchasearningsfromemployment).Othertaxratesmayapplytospecialcategories esuchasinvestment e,andisoftentaxeddifferentlybasedonthenatureofthe e:interest,dividends,orcapitalgainsandlosses.Inadditiontoimposingprogressivetaxratesonordinary e,manycountriestaxinvestmentreturnsdifferentlydependingonwhethertheyareintheformofinterest,dividends,orcapitalgains.InterestanddividendsmightbetaxedatareducedrateortaxedordinaryratesaftertheyexceedsomeLong-termcapitalgainsareoftentaxedatalowerratethanshort-capitalgains,withlong-termdefinitionsvaryingfromonetofiveyearsorInmostcountries,capitalgainstaxesarepaidonlywhencapitalgainsrealized(i.e.,whentheinvestmentis36-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SevenGeneralTax for CapitalGains?CommonHeavyCapitalLightCapitalGainFlatandFlatandThefirstregime,CommonProgressive,isthemostfrequentregimeobservedglobally.Thereis,however,considerablevariationinthespecialtreatmentofinvestment e,withsomecountriesprovidingexemptionforonlypartofinvestment eandothercountriesprovidingexemptionforallinvestmentTheUnitedStates,U.K.,China,France,Italy,Japan,andmanyothercountriesfallunderthisTheLightCapitalGainTaxregimeisthesecondmostcommon37-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—AccrualAccrualAccrualtaxesarepaidperiodically(e.g.,[(1+R)–RxT]N=[1+R(1-T)FuturevalueAT=PV[1+R(1-Taxesarepaideachperiod,sotheperiodicreturnontheaccountisafter-taxreturn,R(1-Theamountoftaxremovedfromtheaccounteachperioddoesnotfuture(compounded)Thereductioninreturncausedbythepaymentoftaxesisreferredastax38-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—AccrualTaxation:TaxExample:Accountsubjecttoaccrual(annual)taxes$1,000isinvestedfor20yearsandearnsabefore-taxreturnof10%.Assumingtheaccrualtaxrateis30%,calculatetheafter-taxvalueoftheaccountin20years.Notethatifthetaxratewerezero,theinvestmentwouldhavebeenFVT=0=futurevalueassumingnotaxes=$1,000*1+0.10(1?0)+20=gainT=0=totalgainwithnotaxes=$6,727.50-$1,000=FVAT=after-taxfuturevalue(accrualtaxespaidannually)=$1,000[1+0.30)]20=gainAT=totalgainafteraccrualtaxes=$3,869.68?$1,000gainlosttoThesecalculationshelpillustratethreefundamentalCompoundingofaccrual(annual)taxesmakestheireffectstatedasa%oftotalgaingreaterthanthetaxrate.Thegainlosttotaxes,statedasacurrencyorasa%,isreferredtoastaxdrag.gainlosttotaxes($)=$5,727.50?$2,869.68=$2,857.82=taxdraggainlosttotaxes(%)=$2,857.82/$5,727.50=49.9%=taxdrag39-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—AccrualTaxation:TaxAccrualTax:TaxdragVSInvestmenthorizon&Taxdrag%>taxInvestmenthorizontaxdrag$&%Investmentreturntaxdrag$&%40-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—DeferredCapitalGainUsingTCGasthetaxrateoncapitalgains,theafter-taxfuturevaluefactorfordeferredcapitalgains(FVIFCGT)FVIFCGT=(1+R)N–[(1+R)N-1]xTCG=(1+R)N–TCGx(1+R)N+=[(1+R)N(1?TCG)+41-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—DeferredCapitalGainSummarizingthesamethreerelationshipsweexaminedforaccrualtaxes,weseethattheyarequitedifferentwhencapitalgainstaxesareappliedonadeferredbasis:Taxdrag%=taxAstheinvestmenthorizonincreases?taxdrag%isAstheinvestmentreturnincreases?taxdrag%isInaddition,whentaxesareAsinvestmenthorizonincreases?thevalueofthetaxdeferralAsinvestmentreturnincreases?thevalueofthetaxdeferral42-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—CostWehaveassumedthatthecostbasisforcomputingtaxesisthecurrentvalue($1,000),asifweinvestedafter-taxHowever,thecostbasisisoftendifferentfromtheinvestment’scurrentvalue.Forexample,thecostbasiscouldbetheoriginalpurchasepriceandthecurrentvalueof$1,000representstheoriginalcostplusunrealizedcapitalgains.Allelseequal,reducingthecostbasisincreasestherealizedcapitalgain,increasestheamountofcapitalgainstaxesdue,andreducesthenetsellingprice.Thuswemodifyourdeferredcapitalgainstaxformulatoaccountforthebasis(B):FVIFCGT,MV≠Basis=[(1+R)N(1?TCG)]+=[(1+R)N(1?TCG)]+TCG–(1-43-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—Wealth-BasedInsomecountries,wealth-basedtaxesareassessedannually(similartoetaxes)onthevalueofassetsheld.Unlikeaccrualtaxesandcapitalgainstaxes,whicharepaidonjusttheinvestmentreturn,wealth-basedtaxesareappliedtoboththeprincipalandreturn.Theyaremostoftenappliedtorealestate,asintheU.K.Fortuna ythewealth-basedtaxrateisusuallylowerinpercentagetermsthanaccrualandcapitalgainstaxrates.ContinuingthenotationfrombeforeexceptthatTWisthewealth-basedrate,thefuturevalueinterestfactorafterthewealth-basedtax(FVIFWT)44-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講2.4SimpleTaxEnvironment—Wealth-BasedTaxes:TaxContinuing,assume$1,000isinvestedfor20yearsandearnsareturnof10%.Assumingtheaccountissubjectonlytoawealth-basedtaxof2%,calculatetheafter-taxvalueoftheaccountin20years.FVT=0=futurevalueassumingnotaxes=$1,000FVWT=futurevalueassumingtaxes=$1,000[(1+0.10)(1-Becausethewealthtaxisappliedtotheentireaccount(bothprincipalandreturns),thisfuturevalueisnotdirectlycomparabletothosewhenaccrualorcapitalgainstaxesareapplied.Notehoweverthattheterminalvalueof$4,491.33isconsiderablylessthanthe$6,727.50before-taxterminalWhen2%wealthtaxesarepaidtaxdrag$=$6,727.50-$4,491.33=taxdrag%=$2,236.17/($6,727.50-$1,000)=45-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SimpleTaxEnvironment—Wealth-BasedTaxes:TaxForwealth-basedtaxes,thethreeprimaryrelationshipscanbesummarizedTaxdrag%>taxAsinvestmenthorizonincreases?taxdrag%andtaxdrag$Asinvestmentreturnincreases?taxdrag$increases;taxdragTaxdrag%=[(1+R)-(1+R)(1-T)]/[(1+R)-AssumeN=1,whenRincrease,Taxdrag%46-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingTocalculatetheafter-taxreturnontheaccount,wemultiplythebeforetaxreturn(R)times1minusrealizedtaxrate,whichconsiderstheproportionofeachformofgainwithitsspecifictaxrate:realizedtax Therealizedtaxrateisnothingmorethantheweightedaveragetaxratepaidbytheinvestor.Pistheweight(proportion)ofeachtypeofreturn, dividend,orrealizedcapitalgain,andTisthetaxrateoneachtypeofreturn.Multiplyingeachtaxratebytherelatedproportionyieldstheweightedaveragetaxrate.Usingthesamesubscriptsforthetaxrates,T,asfortheproportions,P,theannualreturnafterrealizedtaxesoninterest e,dividends,andrealizedcapitalgains(RART)is:RART=R(1-realizedtaxrate)=R[1-47-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingEnvironments—Ix Dx

CGx

UCGx?TECG

UCGxTECG[1-(PITI+PDTD+PCGTCG)]=TCG[1-48-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingEnvironments—TECGandTocalculatetheeffectivecapitalgainstaxrate(TECG)thatadjustsfortheannualtaxesalreadypaidoninterest,dividends,andrealizedcapitalgains,weusetheTECG[1-(PITI+PDTD+PCGTCG)]=TCG[1-Usingreturnafterrealizedtaxes(RART)andtheeffectivedeferredcapitalgainstaxrate(TECG),thefuturevalueinterestfactorconsideringalltaxesaswellasthecostbasisoftheaccount(FVIFT)is:RART=R(1-realizedtaxrate)=R[1-49-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingEnvironments–Beginningoftheyear:MVEndoftheyear:MVTaxRealizedcapitalTotaltaxesUnrealizedCGs=10,000-300-4,000-TECG*[10,000-(TI+TD+TCG)]=70050-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingEnvironments–Usereturnafterrealizedtaxes(RART)andtheeffectivedeferredcapitalgainstaxrate(TECG)tocalculatethefuturevaluebyconsideringthecostbasis:FVIFT=[(1+RART)N(1-TECG)+TECG-(1-SeeNoteP240RART=(10,000-Costbasis=TECG=B=75,000/100,000==51-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingEnvironments–AccrualequivalentAccrualequivalentafter-taxreturn:theannualreturnthatproducesthesameterminalvalueasthetaxableportfolio.YoucanthinkitasEffectiveannualUsetheFVIFTinthepreviousexample=PV=N=RAE=52-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講BlendedTaxingEnvironments–AccrualequivalenttaxUsingtheaccrualequivalentafter-taxreturn,wecancalculateanaccrualequivalenttaxrate.Theaccrualequivalenttaxrate(TAE)isthetaxratethatmakesthepre-taxreturn(R)equaltotheaccrualequivalentafter-taxreturn(RAE).Thinkofitastheoveralleffectivetaxrateontheaccount,consideringbothaccrualanddeferredtaxes: =R(1- )? =1

R RInouraccrualequivalentreturnexample,theaccrualequivalentafter-taxreturnis7.76%andthepre-taxreturnis10%.Calculatetheaccrualequivalenttaxrate.theaccrualequivalenttaxrateTAE=1–0.0776/0.10=0.224=Thelowertheaccrualequivalenttaxrate,themoretax-efficient53-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講TypesofInvestmentSometimes,thetypesofinvestmentaccountsoverridethetaxtreatmentofaninvestmentbasedonitsassetclass.taxableaccounts:investmentsaremadeonanafter-taxbasisandreturnsaretaxedinavarietyofways.Tax-deferredaccounts:allowtax-deductiblecontributionsand/ortax-deferredaccumulationofreturns,butfundsaretaxedwhenwithdrawn.FVIFTDA=(1+r)n(1-Tn)Tax-exemptaccounts:donotallowtax-deductiblecontributions,butallowtax-exemptaccumulationofreturnsevenwhenfundsarewithdrawn.FVIFTEA=(1+r)n54-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講Typesofinvestment$100,000investedineachfourTaxedFVIFAT=[1+R(1-Deferredcapital

$100,000[1+0.09(1-0.35)]30=>$100,000[(1+0.09)30(1-TaxeddeferredTaxexempt

$100,000[(1+0.09)30(1-=>$100,000(1+0.09)3055-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講ChoosingAmongAccountFVIFTDA=(1+R)N(1-IFT0>TN=>FVTDA>FVTEAIFT0=TN=>FVTDA=FVTEAIFT0<TN=>FVTDA<56-【夢(mèng)軒考 專業(yè)提供CFAFRM全 TaxandInvestmentInTaxedAccount- ernment(taxingauthority)bearspartofInTax-exemptaccount–Theinvestorsbearsalltheinvestment57-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講Example:RiskReductionwithAccrualTaxesSupposeaninvestorhashalfherportfolioinstocksandhalfinbonds.Thereturnsonthestockinvestmentaretaxedatanannualrateof20%(dividendsreceivespecialtreatment)andthebondreturnsaretaxedatarateof30% eistaxedasordinary e).Thepre-taxstandarddeviationofstockreturnsis16%andthepretaxstandarddeviationofbondreturnsis6%.Calculatethepre-taxandafter-taxstandarddeviationsofportfolioreturns,assumingthecorrelationbetweenstocksandbondsis1.Answer:Ifthecorrelationbetweenstocksandbondsis1,thepre-taxstandarddeviationofportfolioreturnsisasimpleweightedaverageoftheindividualstandarddeviations:σP,before-tax0.516%0.56%Becausetaxesarepaidannuallyondividendsandinterest,theafter-standarddeviationofreturnsusesbothafter-taxassetstandardσP,after-tax0.516%(10.2)0.56%(10.3)58-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講Example:RiskReductionwithAccrualandDeferredNowassumethebondsareheldinatax-exemptaccount.Calculatetheafter-taxstandarddeviationofportfolioreturnsandcompareittothebefore-taxportfoliostandarddeviationandtheportfoliostandarddeviationwithaccrualtaxesonly.Answer:Theafter-taxstandarddeviationofportfolioreturnsσP,after-tax0.516%(10.2)0.56%59-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講ImplicationforWealthManagement–TradingFromatax-managementstandpoint,aninvestorshouldlocateheavilytaxedassetsintaxadvantagedaccountsandholdlightlytaxedassetsintaxableaccounts.thevaluecreatedbytheeffectivetaxmanagementofinvestmentsisreferredtoasthetaxalpha.Inmostcountriesthestrategywouldbetoplaceequityintaxableaccounts,becausetheircurrent eislowerthanthatforbondsandcapitalgainscanoftenbedeferred.Bonds,withtheirhighercurrent e,wouldbeplacedinatax-protectedaccount,suchasaTDA.Inadditiontoexaminingassetlocationasasourceoftaxminimization,wecanexamineaninvestor’stradingTraders—duetofrequenttrading,tradersforgothetaxadvantagesassociatedequity.Allgainsareshort-termandarethustaxedonanannualActiveinvestors—activeinvestorstradelessfrequentlythantraderssothatmanytheirgainsarelonger-terminnatureandtaxedatlowerPassiveinvestors—passiveinvestorsbuyandholdequitysothatgainsaredeferredlong-termandtaxedatpreferentialrates.Exemptinvestors—exemptinvestorsholdalltheirstockintax-exempttherebyavoidingtaxation60-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講TaxLossHarvestingandTaxlossharvestingisthepracticeofusinginvestmentlossestooffsetinvestmentgainsor eandthusavoidtheassociatedtaxes.Overtime,investorsoftenaccumulatelargepositionsinsinglesecuritiesbypurchasingseverallotsatdifferentprices.whentaxingauthoritiesallowHIFOaccounting,investorscangeneratesignificanttaxsavingsbyfirstliquidatinglotswiththehighestcostbases.Liketaxlossharvesting,HIFOallowsthetaxsavingstobereinvestedcreatingataxalphathatcompoundsthrough61-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講HoldingPeriodHoldingperiodManytaxauthoritiesimposeahighercapitalgainstaxrateonshorter-termversuslonger-termholding.Itisparticularlydesirabletoextendtheholdingperiodwhenitalsothetax62-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講SummaryofReadingsandSS4PrivateWealthRR

ManagingIndividualInvestorTaxesandPrivateWealthManagementinaGlobalRR EstatePlanninginaGlobalSS5PrivateWealthRR

LifetimeFinancialAdvice:HumanCapital,AssetAllocation,63-【夢(mèng)軒考 專業(yè)提供CFAFRM全 +講EstatePlanning:BasicEstatePlanningassociatedwithtransferringestatetoothersduringoratMostcommontoolisaAlsoknownasa transferrigassetsthr awillisknownastetsttWillsaresubjecttoAdecedentwithoutavalidwillorwithawillthatdoesnotdisposeofpropertyisconsideredtohavedied64-【夢(mèng)軒考 專業(yè)提供CFAFR