FNCE 5610, Personal Finance H Guy Williams, 2009
|
|
- Agatha Robinson
- 5 years ago
- Views:
Transcription
1 CH 12: Introduction to Investment Concepts Introduction to Investing Investing is based on the concept that forgoing immediate consumption results in greater future consumption (through compound interest and appreciation). Therefore, the FIRST step to investing is to SAVE rather then CONSUME. Establishing SMART Financial Goals The second step is proper goal setting Goals establish the financial target Strategies create the means to reach the target Specific Measurable Attainable Realistic Timely NOT a vague idea that someday I d like to be rich Time Horizon of Goals Effects Investment Choices Short term (<2 years) Saving for down payment on automobile Creating an emergency fund Conservative investments Intermediate (2 10 years) Funding child s college education Saving for down payment on home Moderate risk investments Long term (>10 years) Saving for retirement More aggressive investments FNCE5610 Lecture 5 Page 1 of 15
2 Impediments to Achieving Goals Taxes Inflation, why postpone consumption if purchasing power will be less? Poor: planning, goal setting, discipline (spending more then earned) Investment risks Fundamental Investment Goals Capital accumulation No need for capital = no need to invest Preservation of capital Inflation protection for accumulated wealth at minimal risk Maximizing returns Greater returns generally require greater risk Minimizing risk EVERONE wants HIGH returns and LOW risk, but this is unrealistic and must be balanced to best achieve financial goals Budgeting Saving money from current budget to achieve financial goals is the first step This can be accomplished by: Limiting short-term credit to amounts easily paid off each month NOTE: pay off high interest debt FIRST. Paying off 18% debt is like getting a GUARANTEED 18% after tax return! Managing income and expenses monthly Increase savings by reducing discretionary expenditures (there is often little short term control of income) Methods of Increasing Savings PAY YOURSELF FIRST BY: Payroll deduction into savings/investments FNCE5610 Lecture 5 Page 2 of 15
3 Systematic transfers of dollars from checking account automatically every month into an investment (all mutual funds allow this) Allocating a portion of future raises or any lump sums (tax refund) to savings Elective savings programs (401(k)) Begin saving early Time/Savings Example Investment Risk Uncertainty of future outcomes= risk, this means different things to different investors BUT All investors expect higher returns for higher levels of risk AND All investors must accept SOME degree of risk TWO Risk Types 1) Systematic Risks Risks affected by broad macroeconomic factors FNCE5610 Lecture 5 Page 3 of 15
4 Cannot be eliminated (non-diversifiable risk) because at least one risk factor effects each security. Also known as Beta risk Market risk-securities tend to move with the market up or down, depending on changes in the economic environment Purchasing power risk Risk that inflation will erode real value of investor s assets Bonds maturity value is fixed their purchasing power is not Interest rate risk Risk that interest rates will affect the current value of securities Interest rates are inversely related to value of bonds and stocks Reinvestment risk Risk that future earnings distributed cannot be reinvested at a rate of return equal to the expected yield of current investments Zero-coupon bonds free of such risk: nothing paid until maturity so nothing to reinvest Foreign Currency Risk Risk that a change in relationship between value of dollar and value of foreign currency will occur Example John invests $1 million in Loco Caliente, which is based in Mexico; conversion rate is 10 pesos to $1; John has invested 10 million pesos in Locao Caliente John sells his interest for 15 million pesos; conversion rate is now 12 pesos to $1 (The $ went UP in value relative to Pesos) John receives $1.25 million Gain on investment: 50% (5 million pesos 10 million pesos) Loss on conversion: 16.67% (10 pesos 12 pesos) Overall gain: 25% ($250,000 $1 million) 2) Unsystematic Risks Risks unique to single security, company, industry, or country (Measured by Alpha ) CAN be eliminated through diversification (owning diversified stocks) FNCE5610 Lecture 5 Page 4 of 15
5 Types of Unsystematic Risk Business risk Speculative nature of business, management, and philosophy Uncertainty of operating income Utilities are less risky than cyclical companies Financial risk Risk created by leverage of firm Use of debt magnifies return on equity (ROE) Default risk Associated with the inability of a business to pay its debt US government securities are default-risk free Tracked by rating agencies (Moody s) Country (regulation) risk Associated with the potentially adverse effect of changes in a country s laws or political situation FNCE5610 Lecture 5 Page 5 of 15
6 Liquidity and Marketability Liquidity Ability to sell an investment quickly Competitive price No loss of principal Little price concession Marketability Availability of a ready market Example: real estate is marketable but not considered liquid because it often takes a long time to find a buyer Investment Choices, THREE Types 1) Lending investments (bonds) Default risk (none with US government issues) Interest rate risk (inverse relationship) bond holders paid before stockholders 2) Ownership investments in business Stock Appreciation and dividends Greater risk then bonds 3) Ownership investments in real estate Rental Income Depreciation deduction Value changes have a low correlation with other assets Investment Choices (cont.) Derivatives: securities based on the value of another security Options contracts Put option The right to sell ( put to the buyer) the underlying security at a specific price within a specified time frame Call option: the right to buy the underlying security at a specific price within a stated time frame Futures contract: a contract to purchase (or sell) a specific commodity at a specific time for a certain price FNCE5610 Lecture 5 Page 6 of 15
7 Direct vs. Indirect Investing Direct Investing Purchase of the actual security (such as a stock through a brokerage account) Indirect Investing (Mutual Funds) Purchase of shares of a company that invests directly Professional management, diversification, investor services (systematic deposit++) Measures of Risk Investment risk is generally measured in terms of volatility Beta a measure of systematic risk - measures volatility of a portfolio of investments compared to the market as a whole (the market has a Beta of 1.0) A portfolio with a Beta of 1.2 would be 20% more volatile then the market..8= 20% less volatile. Best used with well diversified portfolios (little unsystematic risk so almost all Beta risk) and mutual funds that correlate well with the market Measures of Risk (cont.) Alpha measures the unsystematic risk unique to the security. Alpha of 1.09 means security is expected to increase 9% in a flat market. Standard deviation measures total volatility (systematic and unsystematic risk) by statistically determining how far the actual returns deviate from the average return. A portfolio with an expected return of 12% and a standard deviation of 10% would be expected to range between 2% and 22% 68% (1SD) of the time. Semivariance measures downside volatility (below the average returns) corrects for the possibility that a portfolio with high standard deviation is high mostly because of high POSITIVE returns Measures of Return Holding period return Arithmetic mean Geometric mean FNCE5610 Lecture 5 Page 7 of 15
8 Internal rate of return Real rate of return Holding Period Return EVI = Ending value of investment BVI = Beginning value of investment $100/$50 =100% return Does NOT account for LENGTH of hold FNCE5610 Lecture 5 Page 8 of 15
9 Arithmetic Mean Geometric Mean Geometric mean is internal rate of return when solving: PV = 100 FV = 100 (1 + R1)(1 + R2)(1 + R3)(1 + Rn) N = n Rn = return for period n n = number of periods Comparison Year 1 BOY=$100, EOY=$200. ROR=100% Year 2 BOY=$200, EOY= $100, ROR=(50%) Arithmetic Mean= (100+(50))/2= 25% Geometric mean= PV=-100, FV=100 n=2, I=0% The arithmetic mean is not as practical for evaluating investment returns as the geometric mean but is sometimes used nevertheless. FNCE5610 Lecture 5 Page 9 of 15
10 Internal Rate of Return FNCE5610 Lecture 5 Page 10 of 15
11 Real Rate of Return Rn = Nominal (stated) rate of return I = Inflation rate Real Return is Nominal return adjusted for inflation (same as used in education funding examples) Modern Portfolio Theory Modern portfolio theory is based on the diversification process. It determines an efficient frontier consisting of investment portfolios (through the process of asset allocation) with the highest expected return for a given level of risk The Efficient Frontier FNCE5610 Lecture 5 Page 11 of 15
12 Markowitz s Three Rules Same expected return choose lower risk Same risk choose higher expected return Choose a portfolio with a higher expected return and lower risk Modern Portfolio Theory (cont.) Most asset allocation software packages help build efficient portfolios using: Standard deviation of each asset class (historical or estimate) Expected return of each asset class (historical or estimate) correlation coefficients of each asset class Asset classes: Large-cap value, LC core, LC growth Small/Mid-cap value, SMC Core, SMC growth International Equity, Int. fixed, emerging market equity, US Treasury fixed, US Corp fixed, US Muni fixed Once the portfolio is created, return projections can be made to determine if it is tracking to meet objectives FNCE5610 Lecture 5 Page 12 of 15
13 Correlation Coefficient (R) Key to the asset allocation concept How the change in one assets return relates to another assets return: R = +1.0; perfect positive correlation R = 1.0; perfect negative correlation R = 0; no correlation you want assets in your portfolio that DON T all have high correlation with each other, so that they won t all move in the same direction in reaction to an event Risk Tolerance Each investor has a different level of portfolio risk that is appropriate for their: Investment time frame Income and assets Income Vs. appreciation goals Capital preservation goals Comfort level with volatility The end result: efficient portfolio allocations based on goals and risk tolerance Investment Strategies and Theories Efficient market hypothesis (EMH) The theory that the market constantly prices securities fairly and efficiently and investors cannot outperform the market on a risk adjusted basis. All information is already built into the price and only NEW information will effect the price therefore technical (searching for recurring stock patterns) or fundamental (value based on earnings, sales, industry analysis+) analysis is futile. Many studies have shown that it is difficult for professional managers to outperform the market. FNCE5610 Lecture 5 Page 13 of 15
14 Active Versus Passive Investing Active management strategies use research to attempt to find undervalued securities and earn higher returns then passive management approaches Passive management holds a well diversified portfolio based on asset allocation and rebalances over time Other Strategies Indexing: a passive approach using a portfolio of the same securities, in the same proportion, as an index (S&P 500) simple, low cost, can be diversified Timing the market Using a variety of indicators and models timers attempt to be fully invested in up markets and in cash in down markets. Knowing when to get in and out is very difficult and studies show over 90% of timing systems fail, (and 10% are going to fail soon???) Summary Asset Allocation: 1. Determine goals and objectives considering such factors age, time horizon, family situation, risk tolerance,income level, liquidity needs, and taxes 2. Select asset classes consistent with objectives (choose NON-correlated classes and diversify WITHIN the classes) 3. Determine weighting for each class selected for the portfolio 4. Rebalance as need to maintain weightings 5. Typical allocation: 65% stocks, 25% bonds 10% cash FNCE5610 Lecture 5 Page 14 of 15
15 Beta A measure of a portfolio's sensitivity to market movements (as represented by a benchmark index). The benchmark index, such as the S&P 500 or EAFE index, has a beta of 1.0. A beta of more (less) than 1.0 indicates that a fund's historical returns have fluctuated more (less) than the benchmark index. Beta is a more reliable measure of volatility when used in combination with a high R² which indicates a high correlation between the movements in a fund's returns and movements in a benchmark index. R 2 A measurement of how closely the portfolio's performance correlates with the performance of a benchmark index, such as the S&P 500. R² is a proportion which ranges between 0.00 and An R² of 1.00 indicates perfect correlation to the benchmark index, that is, all of the portfolio's fluctuations are explained by performance fluctuations of the index, while an R² of 0.00 indicates no correlation. Therefore, the lower the R², the more the fund's performance is affected by factors other than the market as measured by that benchmark index. Alpha A risk-adjusted performance measure. A positive (negative) alpha indicates stronger (poorer) fund performance than predicted by the fund's level of risk (measured by beta). Alpha and beta are more reliable measures when used in combination with a high R2 which indicates a high correlation between the movements in a fund's returns and movements in a benchmark index. Alpha is annualized. Standard Deviation Statistical measure of how much a return varies over an extended period of time. The more variable the returns, the larger the standard deviation. Investors may examine historical standard deviation in conjunction with historical returns to decide whether an investment's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate how an investment actually performed, but it does indicate the volatility of its returns over time. Standard deviation is annualized. The returns used for this calculation are not load-adjusted. FNCE5610 Lecture 5 Page 15 of 15
CHAPTER - IV RISK RETURN ANALYSIS
CHAPTER - IV RISK RETURN ANALYSIS Concept of Risk & Return Analysis The concept of risk and return analysis is integral to the process of investing and finance. 1 All financial decisions involve some risk.
More information(Modern Portfolio Theory Review)
(Modern Portfolio Theory Review) IFS-A76898 Charts 1-9 Reminder: You must include the Modern Portfolio Theory Disclosure pages with all charts you select to use, either individually or as a group. Information
More informationDiversification. Chris Gan; For educational use only
Diversification What is diversification Returns from financial assets display random volatility; and with risk being one of the main factor affecting returns on investments, it is important that portfolio
More informationStock Market Basics. Capital Market A market for intermediate or long-term debt or corporate stocks.
Stock Market Basics Capital Market A market for intermediate or long-term debt or corporate stocks. Stock Market and Stock Exchange A stock exchange is the most important component of a stock market. It
More information49 Employ a Moderate Portfolio
206 # 49 Employ a Moderate Portfolio By Peggy Creveling, CFA The moderate portfolio shifts up the risk, volatility, and return scale when compared with the conservative portfolio, including perhaps more
More informationBPK6C SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT. Unit : I to V. BPK6C - Security analysis and portfolio management
BPK6C SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT Unit : I to V BPK6C - Security analysis and portfolio management UNIT 1 SYLLABUS Nature and Scope of investment management Investment management & portfolio
More informationPortfolio Management & Analysis
Index Portfolio Monitor, Analysis and Maintenance Page 2 Portfolio Rebalancing Emotional Control Annual Performance Page 3 Detailed Analysis Page 4 Portfolio Risk Level Portfolio Management & Analysis
More informationFNCE 5610, Personal Finance H Guy Williams, 2009
Ch 12: Supplement A Fixed-Income Securities Basic Concepts of Lending Securities Fixed-income securities (bonds): are securities where an investor lends funds to the issuer in exchange for a promise of
More informationGROWTH FIXED INCOME APRIL 2013
GROWTH FIXED INCOME APRIL 2013 BACKGROUND Most investors view fixed income investments as providing a liability-matching or defensive aspect to their total portfolio. The types of investments considered
More informationVertex Wealth Management LLC 12/26/2012
Vertex Wealth Management LLC Michael J. Aluotto, CRPC President Private Wealth Manager 1325 Franklin Ave., Ste. 335 Garden City, NY 11530 516-294-8200 mjaluotto@1stallied.com Investment Basics 12/26/2012
More informationMMBB Financial Services 2/15/2013
MMBB Financial Services Brian J. Doughney, CFP Senior Wealth Manager 475 Riverside Dr Suite 1700 New York, NY 10115 800-986-6222 brian.doughney@mmbb.org Investment Basics 2/15/2013 Page 1 of 20, see disclaimer
More informationRisk -The most important concept of investment
Investment vs. Saving How is investing different from saving? Investing means putting money to work to earn a rate of, while saving means put the money in a home safe, or a safe deposit box. Investments
More informationWhat Is Investing? Why invest?
Chuck Brock, PhD, LUTCF, RFC Managing Partner Grace Capital Management Group, LLC Investment Advisor 13450 Parker Commons Blvd. Suite 101 239-481-5550 chuckb@gracecmg.com www.gracecmg.com Investment Basics
More informationq merrill edge guided investing strategy profile CIO Moderately Conservative ETF Core Tax Aware
Overview This Strategy seeks to provide diversified exposure among three major asset classes for a client's account with a moderately conservative target asset allocation. In normal market conditions,
More informationThe Process of Portfolio Management. Presentation by: William Wood CFP
The Process of Portfolio Management Presentation by: William Wood CFP 1 Investments Traditional investment processes cover: Security analysis Involves estimating the merits of individual investments Portfolio
More informationDoes Portfolio Theory Work During Financial Crises?
Does Portfolio Theory Work During Financial Crises? Harry M. Markowitz, Mark T. Hebner, Mary E. Brunson It is sometimes said that portfolio theory fails during financial crises because: All asset classes
More informationIntroduction to investments
Introduction to investments Contents Risk versus return 3 Asset classes 4 Defensive and growth asset classes 5 Asset class performance 6 Managing risk 7 Index and active investment 10 Impact of inflation
More informationGlossary of General Investment-Related Terms
Glossary of General Investment-Related Terms 12b-1 Fee: A fee assessed on certain mutual funds or share classes permitted under an SEC rule to help cover the costs associated with marketing and selling
More informationLazard Insights. Distilling the Risks of Smart Beta. Summary. What Is Smart Beta? Paul Moghtader, CFA, Managing Director, Portfolio Manager/Analyst
Lazard Insights Distilling the Risks of Smart Beta Paul Moghtader, CFA, Managing Director, Portfolio Manager/Analyst Summary Smart beta strategies have become increasingly popular over the past several
More informationInvestor Goals. Index. Investor Education. Goals, Time Horizon and Risk Level Page 2. Types of Risk Page 3. Risk Tolerance Level Page 4
Index Goals, Time Horizon and Risk Level Page 2 Types of Risk Page 3 Risk Tolerance Level Page 4 Risk Analysis Page 5 Investor Goals Risk Measurement Page 6 January 2019 Investor Education Investor Education
More informationCALM, COOL AND INVESTED
CALM, COOL AND INVESTED Staying on track to live the life you want This brochure provides year-end performance. When data for subsequent quarters are available, the brochure must be accompanied by a performance
More informationThe Pokorny Group at Morgan Stanley Smith Barney. Your success is our success.
The Pokorny Group at Morgan Stanley Smith Barney Your success is our success. Our Mission With nearly two decades in the brokerage industry, we offer you an insightful and experienced team that is committed
More informationGetting Smart About Beta
Getting Smart About Beta December 1, 2015 by Sponsored Content from Invesco Due to its simplicity, market-cap weighting has long been a popular means of calculating the value of market indexes. But as
More informationInvestment Terms Glossary
Investment Terms Glossary 12b-1 Fee: A fee assessed on certain funds and associated share classes permitted under an SEC rule to help cover the cost associated with marketing and selling the fund; 12b-1
More informationInvestment Analysis & Portfolio Management FIN 630 Fall Quiz # 3 SOLUTION
Investment Analysis & Portfolio Management FIN 630 Fall - 2007 Quiz # 3 SOLUTION 1) The current yield on a bond is equal to A) The internal rate of return. B) The yield to maturity. C) Annual interest
More informationCHAPTER 1 AN OVERVIEW OF THE INVESTMENT PROCESS
CHAPTER 1 AN OVERVIEW OF THE INVESTMENT PROCESS TRUE/FALSE 1. The rate of exchange between certain future dollars and certain current dollars is known as the pure rate of interest. ANS: T 2. An investment
More information20% 20% Conservative Moderate Balanced Growth Aggressive
The Global View Tactical Asset Allocation series offers five risk-based model portfolios specifically designed for the Retirement Account (PCRA), which is a self-directed brokerage account option offered
More informationGlossary Of Investment-Related Terms
Glossary Of Investment-Related Terms PART 1 General Investment-Related Terms 12b-1 Fee: A fee assessed on certain mutual funds or share classes permitted under an SEC rule to help cover the costs associated
More informationSavings and Investment. July 23, 2014
Savings and Investment July 23, 2014 Personal Financial Planning Process The personal financial planning process includes four main elements: Setting financial goals; Financial assessment; Developing and
More informationINVESTMENT GUIDE. Table of Contents. Introduction About Savings Plus... 1 How to Invest for Your Retirement... 1
INVESTMENT GUIDE INVESTMENT GUIDE Table of Contents Introduction About Savings Plus... 1 How to Invest for Your Retirement... 1 Section 1: Asset Allocation Two Key Elements of Asset Allocation... 3 How
More informationBuilding Your Portfolio
INVESTMENT POLICY GUIDANCE REPORT Building Your Portfolio A Personalized Approach to Your Investment Portfolio Investing is about more than money. You re investing for a reason maybe it s retirement, sending
More informationVIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY OPTIONAL RETIREMENT AND CASH MATCH PLANS INVESTMENT POLICY STATEMENT
VIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY OPTIONAL RETIREMENT AND CASH MATCH PLANS INVESTMENT POLICY STATEMENT May 2007 TABLE OF CONTENTS Page EXECUTIVE SUMMARY...1 PURPOSE OF THE INVESTMENT
More information50% 21%of those INVESTING FOR YOU: 5 CRITICAL QUESTIONS FOR EVERY INVESTOR ... More. than
INVESTING FOR YOU: 5 CRITICAL QUESTIONS FOR EVERY INVESTOR People spend a lot of time worrying about finding the best investment. They pick a bond, mutual fund or stock and then second-guess themselves
More information2) Bonds are financial instruments representing partial ownership of a firm. Answer: FALSE Diff: 1 Question Status: Revised
Personal Finance, 6e (Madura) Chapter 14 Investing Fundamentals 14.1 Types of Investments 1) Before you start an investment program, you should ensure liquidity by having money in financial institutions
More informationHOW TO HARNESS VOLATILITY TO UNLOCK ALPHA
HOW TO HARNESS VOLATILITY TO UNLOCK ALPHA The Excess Growth Rate: The Best-Kept Secret in Investing June 2017 UNCORRELATED ANSWERS TM Executive Summary Volatility is traditionally viewed exclusively as
More informationInvesting Handbook. Portfolio, Action & Research Team. Understanding the Three Major Asset Classes: Cash, Bonds and Stocks
2013 Portfolio, Action & Research Team Investing Handbook Understanding the Three Major Asset Classes: Cash, Bonds and Stocks Stéphane Rochon, CFA, Equity Strategist Natalie Robinson, Data Research and
More informationPRINCIPAL LIFETIME HYBRID COLLECTIVE INVESTMENT FUNDS DISCLOSURE DOCUMENT
PRINCIPAL LIFETIME HYBRID COLLECTIVE INVESTMENT FUNDS DISCLOSURE DOCUMENT Information provided in this summary is as of October 3, 2017. This summary includes key information about the Collective Investment
More informationPrinciples of Finance Risk and Return. Instructor: Xiaomeng Lu
Principles of Finance Risk and Return Instructor: Xiaomeng Lu 1 Course Outline Course Introduction Time Value of Money DCF Valuation Security Analysis: Bond, Stock Capital Budgeting (Fundamentals) Portfolio
More informationBUILDING INVESTMENT PORTFOLIOS WITH AN INNOVATIVE APPROACH
BUILDING INVESTMENT PORTFOLIOS WITH AN INNOVATIVE APPROACH Asset Management Services ASSET MANAGEMENT SERVICES WE GO FURTHER When Bob James founded Raymond James in 1962, he established a tradition of
More informationMotif Capital Horizon Models: A robust asset allocation framework
Motif Capital Horizon Models: A robust asset allocation framework Executive Summary By some estimates, over 93% of the variation in a portfolio s returns can be attributed to the allocation to broad asset
More informationCertification Examination Detailed Content Outline
Certification Examination Detailed Content Outline Certification Examination Detailed Content Outline Percentage of Exam I. FUNDAMENTALS 15% A. Statistics and Methods 5% 1. Basic statistical measures (e.g.,
More information2
1 2 3 4 5 6 Say that you need to generate $4,000 per month in retirement and $1,000 will come from social security and you have no other pension. This leaves $3,000 per month, or $36,000 per year, that
More informationEssential Skills: The Basics of Asset Allocation
Essential Skills: The Basics of Asset Allocation Today s Agenda What is asset allocation and why is it important Three major asset classes and their associated risks Factors in determining an appropriate
More informationTactical Growth ETF. Investor Presentation N ORTHC OAST I NVESTMENT A DVISORY T EAM NORTHCOASTAM. COM
Tactical Growth ETF Investor Presentation N ORTHC OAST I NVESTMENT A DVISORY T EAM 203.532.7000 INFO@ NORTHCOASTAM. COM NORTHCOAST ASSET MANAGEMENT An established leader in the field of tactical investment
More informationFactor Investing. Fundamentals for Investors. Not FDIC Insured May Lose Value No Bank Guarantee
Factor Investing Fundamentals for Investors Not FDIC Insured May Lose Value No Bank Guarantee As an investor, you have likely heard a lot about factors in recent years. But factor investing is not new.
More informationCHAPTER 5: ANSWERS TO CONCEPTS IN REVIEW
CHAPTER 5: ANSWERS TO CONCEPTS IN REVIEW 5.1 A portfolio is simply a collection of investment vehicles assembled to meet a common investment goal. An efficient portfolio is a portfolio offering the highest
More informationIntroduction to Investing
Introduction to Investing "Take Charge of Your Finances" Advanced Level Saving and Investing Once an appropriate amount of liquid assets are reached Remember: The purpose of savings is to develop financial
More informationIntention versus practice: factors limiting downside protection in portfolio models
July 2016 Intention versus practice: factors limiting downside protection in portfolio models Few portfolios in our study Leo M. Zerilli, CIMA Head of Investments John Hancock Investments John P. Bryson
More informationChapter 5: Answers to Concepts in Review
Chapter 5: Answers to Concepts in Review 1. A portfolio is simply a collection of investment vehicles assembled to meet a common investment goal. An efficient portfolio is a portfolio offering the highest
More informationMoneyWise Module 3 Saving and Investing: The Road to Financial Independence
Personal Finance Essentials: 8 Financial Priorities III MoneyWise Workshop Saving and Investing: The Road to Financial Independence Module 3 Discussion Topics 1. Perspectives: Spiritual matters 5. Investing
More informationCOPYRIGHTED MATERIAL. Investment management is the process of managing money. Other terms. Overview of Investment Management CHAPTER 1
CHAPTER 1 Overview of Investment Management Investment management is the process of managing money. Other terms commonly used to describe this process are portfolio management, asset management, and money
More informationRisk and Return. Nicole Höhling, Introduction. Definitions. Types of risk and beta
Risk and Return Nicole Höhling, 2009-09-07 Introduction Every decision regarding investments is based on the relationship between risk and return. Generally the return on an investment should be as high
More informationRisk Tolerance Assessment Matching risk tolerance and time horizon to an allocation
Risk Tolerance Assessment Matching risk tolerance and time horizon to an allocation In determining the most appropriate asset allocation for your needs, there are two components that must be considered
More informationch1 Student: 2. Rare painting and baseball cards may be considered as forms of an investment.
ch1 Student: 1. In an efficient and informed capital market environment, those investments with the greatest return tend to have the greatest risk. 2. Rare painting and baseball cards may be considered
More informationBehavioral Finance 1-1. Chapter 2 Asset Pricing, Market Efficiency and Agency Relationships
Behavioral Finance 1-1 Chapter 2 Asset Pricing, Market Efficiency and Agency Relationships 1 The Pricing of Risk 1-2 The expected utility theory : maximizing the expected utility across possible states
More informationPlanning an Investment Strategy
Planning an Investment Strategy VALUE L I N E I N V EST M E N T E DUCAT I ON Smart research. Smarter investing. 2015 Value Line, Inc. All Rights Reserved. Value Line, the Value Line logo, The Value Line
More informationGreen Investment Management, Inc.
Complete List of Composites 7/12/2017 Complete List of Composites Composite Name GIM Composites Tax Aware 50/50 Tax Aware 60/40 Tax Aware 75/25 Tax Free Bond Guardian Composites Alternatives Balanced 60/40
More informationAsset Allocation Questionnaire
Asset Allocation Questionnaire Asset Allocation Questionnaire The following questions will enable you to determine your time horizon and risk tolerance levels so that you can select a model asset allocation
More informationGoing Beyond Style Box Investing
Going Beyond Style Box Investing NCPERS Presented by Erin Doyle Orekhov, Client Portfolio Manager May 22, 2017 For financial professional or qualified institutional investor use only. Not for inspection
More informationPrincipal LifeTime portfolios. Investment options that strive to keep pace with life
LifeTime portfolios Investment options that strive to keep pace with life Most of us need a little help when it comes to saving for retirement. If you re like many, you may not have the time or interest
More informationEQUITY RESEARCH AND PORTFOLIO MANAGEMENT
EQUITY RESEARCH AND PORTFOLIO MANAGEMENT By P K AGARWAL IIFT, NEW DELHI 1 MARKOWITZ APPROACH Requires huge number of estimates to fill the covariance matrix (N(N+3))/2 Eg: For a 2 security case: Require
More informationSTRATEGY OVERVIEW. Long/Short Equity. Related Funds: 361 Domestic Long/Short Equity Fund (ADMZX) 361 Global Long/Short Equity Fund (AGAZX)
STRATEGY OVERVIEW Long/Short Equity Related Funds: 361 Domestic Long/Short Equity Fund (ADMZX) 361 Global Long/Short Equity Fund (AGAZX) Strategy Thesis The thesis driving 361 s Long/Short Equity strategies
More informationStay on Track with TARGET
Stay on Track with TARGET Whether you re spending time with your family or focusing on your career, your time is valuable. The time you spend searching for that hot dot or keeping abreast of market events
More informationPlan Design, Financial Independence Analysis, Investment Implementation & Management
Plan Design, Financial Independence Analysis, Investment Implementation & Management Our Commitment to You Long before we begin the process of quantifying and analyzing data in an effort to optimize your
More informationtake a few minutes to review the pages that follow to see how to get started.
Picture Your Future Join the SABIC U.S. Employee Retirement Savings Plan today! You've received this booklet because you're eligible to join the SABIC U.S. Employee Retirement Savings Plan (the "Plan").
More informationSample Glossary Of Investment-Related Terms For Disclosures To Retirement Plan Participants
Sample Glossary Of Investment-Related Terms For Disclosures To Retirement Plan Participants Version 1.00 December 19, 2011 General Information SAMPLE GLOSSARY OF INVESTMENT-RELATED TERMS FOR DISCLOSURES
More informationIBM 401(k) Plus Plan. Individual Fund Flyer Conservative Fund
IBM 401(k) Plus Plan Individual Fund Flyer Conservative Fund This investment option is a unitized fund and not a mutual fund and as such is not registered with the Securities Exchange Commission (SEC).
More informationYOUR GUIDE TO GETTING STARTED
William Marsh Rice University Supplemental 403(b) Plan, #50190 Invest in your retirement and yourself today, with help from the William Marsh Rice University Supplemental 403(b) Plan and Fidelity. YOUR
More informationFund Information. Partnering for Success. SSgA Real-Life Insight
SM SSgA Real-Life Insight Fund Information Partnering for Success For Plan Participant Use only. The information contained in this document is intended as investment education only. None of the information
More informationInvestment In Bursa Malaysia Between Returns And Risks
Investment In Bursa Malaysia Between Returns And Risks AHMED KADHUM JAWAD AL-SULTANI, MUSTAQIM MUHAMMAD BIN MOHD TARMIZI University kebangsaan Malaysia,UKM, School of Business and Economics, 43600, Pangi
More informationStaying Ahead of the Investment Curve
Staying Ahead of the Investment Curve Texas Municipal Retirement System November 2013 Dedicated RVK Consulting Team Texas Municipal Retirement System Marcia Beard Principal, Senior Consultant Jeremy Miller
More informationYOUR GUIDE TO GETTING STARTED
Ensign Services, Inc. 401(k) Retirement Savings Plan Invest in your retirement and yourself today, with help from the Ensign Services, Inc. 401(k) Retirement Savings Plan and Fidelity. YOUR GUIDE TO GETTING
More informationRisk and Return. CA Final Paper 2 Strategic Financial Management Chapter 7. Dr. Amit Bagga Phd.,FCA,AICWA,Mcom.
Risk and Return CA Final Paper 2 Strategic Financial Management Chapter 7 Dr. Amit Bagga Phd.,FCA,AICWA,Mcom. Learning Objectives Discuss the objectives of portfolio Management -Risk and Return Phases
More informationState Universities Retirement System of Illinois (IL SURS)
State Universities Retirement System of Illinois (IL SURS) Asset Liability Study April, 2014 Doug Moseley, Partner Kristin Finney-Cooke, CAIA, Sr. Consultant Kevin Leonard, Partner Timothy F. McCusker,
More informationFINAL INVESTMENT POLICY STATEMENT (IPS) FOR FLORIDA MEMORIAL UNIVERSITY, INC.
FINAL INVESTMENT POLICY STATEMENT (IPS) FOR FLORIDA MEMORIAL UNIVERSITY, INC. Policy Compliance The Investment Policy Statement that follows is pursuant to the enactment of the Florida Uniform Prudent
More informationChapter 5. Asset Allocation - 1. Modern Portfolio Concepts
Asset Allocation - 1 Asset Allocation: Portfolio choice among broad investment classes. Chapter 5 Modern Portfolio Concepts Asset Allocation between risky and risk-free assets Asset Allocation with Two
More informationInvesting Intelligently. The SoFi Guide to. What you need to know to make your money work for you.
The SoFi Guide to Investing Intelligently What you need to know to make your money work for you. Advisory Services are offered through SoFi Wealth, LLC Do you dream about buying a house, starting your
More informationDirexion/Wilshire Dynamic Asset Allocation Models Asset Management Tools Designed to Enhance Investment Flexibility
Daniel D. O Neill, President and Chief Investment Officer Direxion/Wilshire Dynamic Asset Allocation Models Asset Management Tools Designed to Enhance Investment Flexibility Executive Summary At Direxion
More informationUnit01. Introduction, Creation of Financial Assets, and Security Markets
FCS 5510 Concept Review Notes: Unit01. Introduction, Creation of Financial Assets, and Security Markets Chapter 01. Definition of investment Portfolio Primary and secondary markets Value and valuation
More informationSarah Riley Saving or Investing. April 17, 2017 Page 1 of 11, see disclaimer on final page
Sarah Riley sriley@aicpa.org Saving or Investing April 17, 2017 Page 1 of 11, see disclaimer on final page Saving or Investing Calculator Chart Prepared for ABC Client Input: Starting balance: $10,000
More informationExpected Return Methodologies in Morningstar Direct Asset Allocation
Expected Return Methodologies in Morningstar Direct Asset Allocation I. Introduction to expected return II. The short version III. Detailed methodologies 1. Building Blocks methodology i. Methodology ii.
More informationSustainable Spending for Retirement
What s Different About Retirement? RETIREMENT BEGINS WITH A PLAN TM Sustainable Spending for Retirement Presented by: Wade Pfau, Ph.D., CFA Reduced earnings capacity Visible spending constraint Heightened
More informationChapter 2: The Asset Allocation Decision
Chapter 2: The Asset Allocation Decision 1. With regard to direct and indirect investing, choose the INCORRECT statement. a. Direct investing refers to the purchase of securities directly in one s brokerage
More informationThe E-Valuator Funds* PROSPECTUS. January 31, The E-Valuator Very Conservative RMS Fund. R4 Class Shares (EVFGX)
The E-Valuator Funds* PROSPECTUS January 31, 2018 The E-Valuator Very Conservative RMS Fund R4 Class Shares (EVVCX) The E-Valuator Conservative RMS Fund R4 Class Shares (EVFCX) The E-Valuator Tactically
More informationEssential Performance Metrics to Evaluate and Interpret Investment Returns. Wealth Management Services
Essential Performance Metrics to Evaluate and Interpret Investment Returns Wealth Management Services Alpha, beta, Sharpe ratio: these metrics are ubiquitous tools of the investment community. Used correctly,
More informationinvestment guide discipline We help protect and build wealth through a multiasset class approach.
ideas At Brinker Capital, we look beyond the traditional methods of investing to help grow real purchasing power for our clients over the long term. discipline We help protect and build wealth through
More informationPaper 4. Fund Investment Consultant Examination. Thailand Securities Institute November 2014
Fund Investment Consultant Examination Paper 4 Thailand Securities Institute November 2014 Copyright 2014, All right reserve Thailand Securities Institute (TSI) The Stock Exchange of Thailand Page 1 Paper
More informationNotes and Reading Guide Chapter 11 Investment Basics
Notes and Reading Guide Chapter 11 Investment Basics Name: 1. Your investing goals should be to your money and. It is important to understand investing from a perspective. A solid grounding in investing
More informationRBC retirement income planning process
Page 1 of 6 RBC retirement income planning process Create income for your retirement At RBC Wealth Management, we believe managing your wealth to produce an income during retirement is fundamentally different
More informationSAMPLE GLOSSARY OF INVESTMENT-RELATED TERMS FOR DISCLOSURES TO RETIREMENT PLAN PARTICIPANTS (Version 1.01 April 26, 2012)
General Information SAMPLE GLOSSARY OF INVESTMENT-RELATED TERMS FOR DISCLOSURES TO RETIREMENT PLAN PARTICIPANTS (Version 1.01 April 26, 2012) The Sample Glossary of Investment-Related Terms for Disclosures
More informationFundSource. Professionally managed, diversified mutual fund portfolios. A sophisticated approach to mutual fund investing
FundSource Professionally managed, diversified mutual fund portfolios Is this program right for you? FundSource is designed for investors who: Want a diversified portfolio of mutual funds that fits their
More informationGUARANTEES. Income Diversification. Creating a Plan to Support Your Lifestyle in Retirement
GUARANTEES GROWTH FLEXIBILITY Income Diversification Creating a Plan to Support Your Lifestyle in Retirement Contents Build a Retirement Plan that Can Last a Lifetime 2 Retirement Is Different Today 4
More informationMonitored Avenue Portfolio Program 1 Overview
Monitored Avenue Portfolio Program 1 Overview The Monitored Avenue Portfolio Program 1 (MAPP 1) is an investment solution consisting of both a pre-set fund selection, applied to our Avenue Portfolios (referred
More informationEnrollment Guide. Future Savings. Time to Focus on a Healthy RETIREMENT. YOUR ENROLLMENT GUIDE FOR THE 457(b) PLAN
Enrollment Guide Future Savings Time to Focus on a Healthy RETIREMENT YOUR ENROLLMENT GUIDE FOR THE 457(b) PLAN Invest some of what you earn today for what you plan to accomplish tomorrow. Your Employer
More informationTake control of your retirement
3020205.E.P-3Mt_Holyoke_Asset_Allocation copy_allocation Mentor 4/19/13 1:24 PM Page 1 Take control of your retirement A guide to help you choose an investment portfolio Your future. Made easier. 3020205.E.P-3Mt_Holyoke_Asset_Allocation
More informationFinancial Markets Economics Fall, 2013
Financial Markets Economics Fall, 2013 What Can You Do With Your Money? Spend it or save it Savings: income not used for consumption Marginal propensity to consume: the change in personal spending that
More informationMulti-Asset Income Investing
LEADERSHIP SERIES Multi-Asset Income Investing Look for go-anywhere flexibility focused on income and guided by a risk framework Adam Kramer l Portfolio Manager Jim Morrow l Portfolio Manager Ford O Neil
More informationCERTIFIED INVESTMENT MANAGEMENT ANALYST (CIMA ) CORE BODY OF KNOWLEDGE
The CIMA Core Body of Knowledge spans five Knowledge Domains, each of which is divided into a number of Sections covering a range of Topics (shown on subsequent pages). KNOWLEDGE DOMAIN 1: FUNDAMENTALS
More informationStatement of Investment Policy Objectives & Guidelines
Statement of Investment Policy Objectives & Guidelines Scope of this Investment Policy This statement of investment policy reflects the investment policy, objectives, and constraints of the funds held
More informationPRINCIPLES of INVESTMENTS
PRINCIPLES of INVESTMENTS Boston University MICHAItL L D\if.\N Griffith University AN UP BASU Queensland University of Technology ALEX KANT; University of California, San Diego ALAN J. AAARCU5 Boston College
More information