Concepts of Investment and Retirement Management

The primary objective of this book is to provide an insight into the basic building blocks used in the development of a structured financial plan. It provides many data tables, charts and graphs, and yes, it is technical, but so is the development of a structured financial plan. All investment decision-making is about risk and uncertainty. Investment risk is a function of rising/falling inflation and rising/falling economic growth. Stocks do best when the economy is growing and...
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The primary objective of this book is to provide an insight into the basic building blocks used in the development of a structured financial plan. It provides many data tables, charts and graphs, and yes, it is technical, but so is the development of a structured financial plan. All investment decision-making is about risk and uncertainty. Investment risk is a function of rising/falling inflation and rising/falling economic growth. Stocks do best when the economy is growing and inflation is falling and bonds do best when the economy and inflation are falling. The current investment environment poses a broad range of uncertainties. Investors are now confronted with strong contrasts between conventional wisdom and unconventional insights. For example, conventional wisdom points to historical average returns for long-term investors, but unconventional insights from history tell a different story. Based on current levels of valuation, an argument could be made that the stock market is likely to deliver only modest or minimal returns in the future. The calculation of investment performance, that is, percent return, of an investment security, mutual fund, investment portfolio, etc., is surprisingly complex. The math isn't hard, but the assumptions used in the performance calculations have a significant impact on the return calculations. Therefore, if an investor does not understand the assumptions behind the return calculations, the return measurements used in financial plan projections may be misleading. The investor's returns lag the investment security returns, resulting from a "buy high/sell low" strategy. A "buy low/sell high" algorithm is presented in this book which provides a very high probability of increasing the investor's return. Investment management strategies may be classified as active or passive. Active management can best be described as an attempt to apply human intelligence to find "good deals" in the financial markets. Passive investment management makes little or no use of information that active investors seek out.