If the portfolio contains investments in precious metals like “Gold”, should it be included in the total investable base or not ?
If “not”, can we put it in Unique circumstances ?
How you can invest gold?
If the case scenario explicitly says to include in investable assets, it should be included. Otherwise, it is mentioned under unique circumstances. I’ve done IPS Individual questions for the past 10 years AM, and have not found one instance of gold, silver…
u should however pay careful attention to residential property owned by the investor and whether it is part of investable assets or not. This will be clearly indicated by the case scenario.
All Assets are not equal to investable base
In one of Finquiz’s mock exams there was an allocation to gold, and the answer didn’t include gold for investable base
Tip
Put into investable base all cash generating assets for which you may calculate return.
Home or RE for personal residence is not an investable asset thus shouldn’t be included into base unless individual holds RE for renting or sale.
Gold, Silver, Copper as psychically commodity as well as Arts, IMO, may be or may not be included but you should be instructed to do so.
As Kevin said, there is no example with Gold and similar in any AM exam 2007-2016.
Are you referring to the Peter & Hilda case study?
Here’s my 2 cents…
Gold is included in the investable asset base in that case study, yes. This is because nothing says otherwise. Remember, the asset base is calculated using what the client currently has in terms of value to _ invest _ (i.e. work out what he has to work with in terms of making a return) - so it’s almost irrelevant that this is gold (it could be a tonne of aluminium for e.g!)
Also, something which I found is to ignore the return they CURRENTLY get on an investment that would be classified as an investable asset (i.e. John has a £500,000 savings account that earns 4% per year) - ignore the 4% per year as you’re trying to collectively figure out the rate he needs based on his total investable asset base and his cash need.
Hopefully that makes sense…(and is correct)