INVESTMENT & pORT MGT

• Investment


  An asset or item acquired with the goal of generating income or appreciation
• How an Investment Works

  The act of investing has the goal of generating income and increasing value over time
• Types of Investments


  • Stocks/Equities
  • Bonds/Fixed-Income Securities
  • Index Funds and Mutual Funds
  • Real Estate
  • Commodities
  • Cryptocurrency
  • Collectibles
  • Cash
• Stock


  A share of ownership of a public or private company. Investors may be entitled to dividend distributions generated from the net profit of the company.
• Bond


  An investment that often demands an upfront investment, then pays a reoccurring amount over the life of the bond. When the bond matures, the investor receives the capital invested back.
• Index Funds, Mutual Funds

  Aggregate specific investments to craft one investment vehicle, instead of selecting each individual company to invest in.
• Real Estate Investment


  Investments in physical, tangible spaces that can be utilized, such as land, office buildings, warehouses, and residential properties.
• Commodities


  Raw materials such as agriculture, energy, or metals. Investors can choose to invest in actual tangible commodities or alternative investment products that represent digital ownership.
• Cryptocurrency


  Blockchain-based currency used to transact or hold digital value. Cryptocurrency companies can issue coins or tokens that may appreciate in value.
• Collectibles


  Acquiring rare items in anticipation of those items becoming in higher demand.
• Cash


  The simplest, most easily understandable investment asset, and the safest.
• If an investment carries high risk


  It should be accompanied by higher returns
• Risk


  The probability of losing 'X' amount of an investment over a given time period or the return volatility of an investment over a given time period
• Return


  Usually presented as a percentage relative to the original investment over a given time period, and can come in the form of capital gains, interest, dividends, or rental income.
• In general, higher investment returns can only be generated by taking on higher investment risk.
• Business


  An organization or corporation that provides goods and services and makes profit as a result.
• Investment


  Putting money in something in the hope of making a profit in the future.
• Investors


  • Retail (nonprofessional) investors
  • Institutional investors
• Retail (nonprofessional) investors


  Individuals who invest for their own benefit and not on behalf of others.
• Institutional investors


  The big guys on the block—the elephants with a large amount of financial weight to push around.
• Financial Market


  Encompasses all activities related to the buying, selling, and exchange of financial assets
• Financial Market

  • Serves as a platform for investors, companies, and governments to raise capital, manage risk, and facilitate economic growth
• Types of Financial Markets

  • Primary Capital Markets
  • Secondary Financial Markets
  • Money Markets
  • Capital Markets
  • Foreign Exchange Markets
  • Derivatives markets
• Primary Market


  Markets in which corporation raise funds through new issues of securities
• Secondary Market


  Markets that trade financial instruments once they are issued
• Initial Public Offering (IPO)


  When a company goes public and offers its shares to the public
• Private Placement


  Direct sale of securities to a select group of investors
• Right Issue


  Existing shareholders are given the right to buy additional shares
• Preferred Allotment


  Reserved shares for specific investors
• Asset Allocation Decision


  Dividing your investment portfolio among different types of assets, such as equities (stocks), fixed income (bonds), and cash and equivalents
• Portfolio Management process


  • Planning
  • Execution
  • Feedback
• Planning


  • Setting Objectives
  • Risk Assessment
  • Time Horizon
• Execution


  • Asset Allocation
  • Security Selection
  • Implementation
• Feedback


  • Monitoring
  • Rebalancing
  • Tax Optimization
• Diversification


  Asset allocation allows you to spread your investments across various asset classes
• Investor Goals and Risk Tolerance


  The right asset allocation varies for each individual based on their financial goals, risk tolerance, and investment horizon
• Life-Cycle Funds


  Mutual funds that tailor portfolios based on an investor's age, risk appetite, and goals
• Individual Investor Life cycle


  • Accumulation Phase
  • Consolidation Phase
  • Spending Phase
  • Gifting Phase
• Accumulation Phase


  • During the early or middle stages of their career, investors focus on accumulating funds. They aim to build a financial cushion for future needs.
• Consolidation Phase


  • This phase occurs in the midpoint of an investor's career. Investors earn more, spend more, and pay off debts. While some take moderate risks, others prefer lower-risk investments to preserve capital.