The Learning Curve: Investing : For the future
Investing is for the future. You need to take a long-term view of your own needs and of the long-term prospects of the assets you invest in. But you need to factor in your short-term need for cash too. The starting point is an asset allocation strategy - finding the right mix of assets to meet your investing needs. The next step is the portfolio building process itself. We cover in detail the following four portfolio categories: Equity Portfolios , Fixed Income Portfolios , Investing in Funds and Alternative Investments.
Asset Allocation
The first question you need to ask yourself when it comes to investing is, "what is my investment aim?" You need to ask yourself what you are trying to achieve because different investment products exhibit different characteristics, both in terms of the returns they offer, and, crucially, in terms of the risks you incur trying to achieve those returns. Asset allocation is all about the right risk/return mix.
Equity Portfolios
There are two key stages to the equity portfolio building process, the first driven by the need to control risk, the second by the need to achieve returns. Risk control is achieved by diversification. Returns can be realised by any number of different investment styles.
Fixed Income Portfolios
There are two broad approaches to fixed income portfolio management; passive and active. Passive management is a ‘buy and hold’ strategy. An active portfolio, on the other hand, seeks to profit from bond price changes created by interest rate fluctuations or by credit rating changes.
Investing in Funds
Direct investment is one thing but you can invest in investment funds too. What is an investment fund? What are the main principles that inform a fund strategy? And what should you - the private investor - think about when deciding whether to take a direct or a pooled approach ?
Alternative Investments
Interest in alternative investment strategies grows daily. What are they? What are the principles that underlie their application? And what of the products themselves? In this module we explore the fundamental characteristics of AIPs and look in detail at first, the hedge fund, and then, structured products.
