Other Investment Constraints
Investment portfolios are constrained primarily by the investor’s time horizon, liquidity needs and risk tolerance. However, other constraints can also be important in certain circumstances.
Tax concerns that act as constraints include estate taxes; the availability of tax advantaged investments; differential tax rates applied to dividends, capital gains and income; and the potential for tax policies to change.
Legal and regulatory constraints can include ERISA (or similar) mandates, limits on concentrations in given assets, and limits to contributions in certain tax-advantaged accounts.
Other unique circumstances can also act as constraints. These include a desire for socially responsible investments, health needs, dependent needs, and the investors experience with certain types of investments.
For more information, see all articles on: Asset Allocation, FInancial Planning, Portfolio Management See also:
The Intelligent Investor: The Classic Text on Value Investing
Financial Statement Analysis: A Practitioner's Guide, 3rd Edition
Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)
