week 1 - the investment process

Question 1

what is the primary determinant of a portfolio’s return?

Answer 1

Asset allocation

Question 2

how often do stock portfolios generally lose money?

Answer 2

1 out of every 4 years

Question 3

what are the 3 steps in the investment planning process

Answer 3

1. situational profiling (stage of life)
2. psychological profiling
3. clients objectives and constraints need to be considered

Question 4

what are the 4 stages of life in regards to investment planning?

Answer 4

1. foundation
2. accumulation
3. maintenance
4. distribution

Question 5

what objectives need to be considered

Answer 5

risk & return objectives

Question 6

what objectives need to be considered, and how are they determined?

Answer 6

ability to take risk (quantitative assessment)

Willingness to take risk (subjective assessment)

Question 7

what constraints need to be considered when investment planning?

Answer 7

1. Liquidity
   
   2. Time horizon
   3. Taxes
   4. Legal and regulatory environment
      
      5. Unique circumstances