An investment adviser has a client who wants to save for college for her child. the child will be entering college in five years. this would be an example of <u>an </u><u>investment constraint</u>.
More about investment constraint :
The variables that restrict or limit an investor's range of investment possibilities are known as investment restrictions. The limitations may be internal or external restrictions. While external restrictions are produced by an outside party, such as a government agency, internal constraints are produced by the investor themselves.
Cash expenditures anticipated and necessary at a given point in the future that are often more than the revenue available are referred to as liquidity constraints. Time Horizon restrictions refer to the time frames over which the portfolio's returns are anticipated to meet particular needs in the future.
Tax constraints depend on when, how, and if returns of different types are taxed. Legal and Regulatory constraints are mostly externally generated and may affect only institutional investors
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