The two major steps in the planning phase are determining investor objectives and constraints. The other choices are subsets of this choice. Objectives are concerned with what an investor wishes or requires to happen with the investment portfolio as well as being mainly concerned with risk and return considerations. Constraints pertain to limitations placed on how portfolio objectives are achieved. Primary constraints associated with liquidity include (1) time horizon, (2) legal and regulatory issues, (3) taxes, and (4) unique circumstance considerations. |
