Investment Planning

CFP^CM Certification Education Program Syllabus

Module IV - Investment Planning

COURSE DESCRIPTION: This module includes introduction to Investment Planning, Investment vehicles, investment strategies, Regulation of an investment advisor, Application to clients, etc.

DETAILED CLASS OUTLINE

Introduction to Investment Planning

1	How investment planning is different from selling investment products
2	Investment risk
	a. Definition of risk
	b. Types of risk
	-Market risk       -Reinvestment risk       -Interest rate risk       -Purchasing power risk       -Liquidity risk       -Political risk       -Exchange rate risk
3	Measuring risk
	a. Standard deviation
	b. Beta
4	Managing risk
	a. Diversification
	-Diversifiable and un-diversifiable risk     -Product diversification     -Time diversification
	b. Hedging
5	Returns
	a. Relationship between risk and return
	b. Compounding
	-Types of returns     -CAGR     -Total returns     -Risk-adjusted returns     -Post-tax returns
	- Tax on capital gains
	- Tax on income
	e. Holding period return
	f. Yield to maturity
6	Investment portfolio
	a. Risk and return on a portfolio
	b. Measuring portfolio risk
	c. Effect of diversification on portfolio risk and return

Investment vehicles

	Concept, structure, returns measurement (income and/or capital gains), tradability, liquidity and legal issues of the following investment vehicles. The objective is to provide an essential understanding of the products from a risk-return perspective, so that proper product recommendations can be made.
8	Fixed income instruments
	a. Securities
	-Government securities     -Corporate Securities
	b. Deposits
	-Bank deposits     -Corporate deposits
9	Insurance-based investments
10	Mutual funds
	a. The concept and role of mutual funds
	b. Fund structures and constituents
	c. Legal and regulatory environment
	d. The prospectus/offer document
	e. Fund distribution and sales practices
	f. Accounting, taxation and valuation norms
	g. Investor services
	h. Investment management
	i. Measuring and evaluating mutual fund performance
11	Equity shares
12	Derivatives
	a. Essential features
	b. Application to investment portfolios
13	Real estate
	a. Forms of real estate investment
	b. Financing real estate
	c. Costs of buying and maintaining
14	Other investments
	a. Bullion
	b. Collectibles
	c. Precious metals

Investment Strategies

15	Active and passive strategies
	a. Market timing
	b. Securities selection
	c. Maturity selection
	d. Buy/hold
16	Asset allocation
	a. Strategic and tactical asset allocation
	b. Fixed and flexible allocation
	c. Rebalancing strategies
	d. Formulae based monitoring and revision of portfolios

Regulation of an investment advisor

17	The regulatory functions, rules and codes of conduct pertaining to planners
	a. Banks: RBI
	b. Mutual funds and collective investment schemes: SEBI
	c. Equity shares: SEBI
	d. Derivatives: SEBI
	e. Grievance mechanisms

Application to Clients

18	Matching investment vehicles to needs of clients
	a. Asset allocation and portfolio rebalancing according to client needs
	b. Case studies
	-Single persons     -Young couples     -Mature couples with grown children     -Empty nesters