BUS 422 Lecture 1: Part of a Larger Financial Plan
31 Jan 2019
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Bus 422 (003) spring 2019 investments and portfolio management. An investment program must be part of a larger financial plan. Know where and how you spend your money. Never finance the purchase of an automobile. Pay off credit cards every month or better yet don"t use them at all. Common rule of thumb is 3-6 months of expenses. Contribute to 401k plan first if company matches, up to the point company no longer matches. Then come back if possible and finish max. of 401k. **do not allow your emotions to impact decisions. All investment decisions are a tradeoff between expected return and expected risk. Investment management process: determine investor"s tolerance for risk, questionnaire, objective issues (time horizon, age, investment objective) The asset allocation decision is the single most important, accounting for in excess of 90% of the long-term performance of an investor"s portfolio. Unfortunately investors spend very little time on the long-term strategic allocation of their portfolios.
