1 / 12

Financial Investing Presentation to USF Graduate & Professional Student Council 05/21/10 Delroy M Hunter

Financial Investing Presentation to USF Graduate & Professional Student Council 05/21/10 Delroy M Hunter . The Investment Process. What is INVESTING? Is it different from SAVING? Saving requires the consumption of only a part of your income

LeeJohn
Download Presentation

Financial Investing Presentation to USF Graduate & Professional Student Council 05/21/10 Delroy M Hunter

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financial Investing Presentation to USF Graduate & Professional Student Council 05/21/10 Delroy M Hunter

  2. The Investment Process What is INVESTING? Is it different from SAVING? • Saving requires the consumption of only a part of your income • Investing requires a decision to allocate the savings to one or more asset classes, typically with a given objective(s) in mind

  3. The Investment Process What are the implications of “investing”? 1. Requires conscious, active (not passive) decisions 2. A crucial decision is the allocation across asset classes 3. Investing is goal oriented

  4. Essential Nature of Investing 1. Reduce current consumption (save) 2. Invest using a two-step, “top-down” process • Asset allocation • Security selection 3. Enjoy higher (real) consumption at end of investment horizon

  5. Doing the “Two Steps” What is Asset Allocation? • The process of deciding the relative proportions of the investment budget that is invested in various asset classes • The “top” of the “top-down” approach to investing • Different from security selection, which is the identification of individual securities or even sub-classes of assets, once the asset allocation decision has been made • Studies and life experiences show that asset allocation is the dominant determinant of an investor’s terminal wealth

  6. ALLOCATION! What Allocation? Essentials of Asset Allocation • Investor-specific – though investors can be broadly grouped and offered a similar allocation (e.g., Lifestyle Funds) • Is influenced by age, risk tolerance, investment objective, investment horizon • Not a science, although there are some “rules”: • e.g., % equity allocation = (100 – AGE)% • Should be the cornerstone of local and international DIVERSIFICATION

  7. Asset Classes Main asset classes • Equities (stocks) – issued by private sector firms • Bonds (medium to long-term fixed-income securities) – issued by private and public sectors • Real estate (through investment companies or owner-managed) • Cash equivalents (short-term, fixed income securities) – issued by private and public sectors • Commodities (typically through investment companies)

  8. Asset Classes There is a risk-return trade-off to investing in risky securities • What is return? • What is risk? • Where is the trade-off? Higher risk securities are priced to offer higher returns

  9. Investing in Equities • Using investment companies for a fee • Equity mutual funds • Morningstar (http://screen.morningstar.com/FundSelector.html?fsection=ToolScreener) • Yahoo (http://www.finance.yahoo.com/funds) • Investment Co. Institute (http://www.ici.org/stats/index.html) • Exchange traded funds (http://screen.morningstar.com/ETFScreener/Selector.html) • SPDRS (Standard & Poors Depositary Receipts) • VIPERS (Vanguard Index Participation Equity Receipts) • DIAMONDS (DJIA index)

  10. Investing in Equities • Using investment companies for a fee • Closed end funds (http://www.cefconnect.com/Screener/FundScreener.aspx) • Selecting individual stocks (http://finance.yahoo.com/) • Beware of following the hype • Choose stocks that are not highly correlated • Limit the proportion of your portfolio invested in individual stocks

  11. Investing in Fixed Income • Using investment companies for a fee • Bond mutual funds • Morningstar (http://screen.morningstar.com/FundSelector.html?fsection=ToolScreener) • Selecting individual bonds – • U.S. government bonds (http://www.treasurydirect.gov/indiv/myaccount/myaccount_treasurydirect.htm) • Corporate bonds (local and foreign) and foreign sovereigns – see a broker

  12. Investing in Other Asset Classes • Using investment companies for a fee • Real Estate mutual funds (REITs) • (http://finance.yahoo.com/)) • Money Market Funds - through mutual fund families • Commodities - through sector-focused ETFs

More Related