Personal Finance and Wealth Management

2.

Core Investment Principles

2.1.

The Time Value of Money

2.1.1.

Concept of Time Value

2.1.2.

Compounding Interest

2.1.2.1.

Simple vs. Compound Interest

2.1.2.2.

Frequency of Compounding

2.1.2.3.

2.1.3.

Present Value and Future Value

2.1.3.1.

Present Value Calculations

2.1.3.2.

Future Value Calculations

2.1.3.3.

Annuity Calculations

2.1.4.

Discounted Cash Flow Analysis

2.1.4.1.

2.1.4.2.

Applications in Investment Decisions

2.1.4.3.

Net Present Value

2.1.4.4.

Internal Rate of Return

2.2.

Risk and Return Fundamentals

2.2.1.

The Risk-Return Tradeoff

2.2.2.

Historical Risk and Return Data

2.2.3.

Types of Investment Risk

2.2.3.1.

Systematic Risk

2.2.3.1.1.

2.2.3.1.2.

Interest Rate Risk

2.2.3.1.3.

2.2.3.1.4.

2.2.3.2.

Unsystematic Risk

2.2.3.2.1.

Company-Specific Risk

2.2.3.2.2.

2.2.3.3.

2.2.3.4.

2.2.3.5.

Reinvestment Risk

2.2.4.

Measuring Investment Risk

2.2.4.1.

2.2.4.2.

Standard Deviation

2.2.4.3.

2.2.4.4.

2.2.4.5.

Maximum Drawdown

2.2.5.

Assessing Personal Risk Tolerance

2.2.5.1.

Risk Tolerance Questionnaires

2.2.5.2.

Factors Affecting Risk Tolerance

2.2.5.2.1.

Age and Time Horizon

2.2.5.2.2.

Financial Situation

2.2.5.2.3.

Investment Experience

2.2.5.2.4.

Emotional Factors

2.2.5.3.

Risk Capacity vs. Risk Tolerance

2.2.5.4.

Adjusting Risk Over Time

2.3.

Asset Allocation and Diversification

2.3.1.

Principles of Diversification

2.3.1.1.

Reducing Unsystematic Risk

2.3.1.2.

Diversification Across Asset Classes

2.3.1.3.

Geographic Diversification

2.3.1.4.

Sector Diversification

2.3.1.5.

Time Diversification

2.3.2.

Correlation Between Asset Classes

2.3.2.1.

Positive vs. Negative Correlation

2.3.2.2.

Impact on Portfolio Volatility

2.3.2.3.

Correlation Changes Over Time

2.3.3.

Strategic Asset Allocation

2.3.3.1.

Setting Long-Term Targets

2.3.3.2.

Age-Based Allocation Models

2.3.3.3.

Target-Date Fund Concepts

2.3.3.4.

Rebalancing Schedules

2.3.4.

Tactical Asset Allocation

2.3.4.1.

Short-Term Adjustments

2.3.4.2.

Market Timing Considerations

2.3.4.3.

Momentum vs. Contrarian Strategies

2.3.5.

Portfolio Rebalancing

2.3.5.1.

Frequency of Rebalancing

2.3.5.2.

Threshold-Based Rebalancing

2.3.5.3.

Calendar-Based Rebalancing

2.3.5.4.

Methods of Rebalancing

2.3.5.5.

Tax Implications of Rebalancing

2.3.6.

Modern Portfolio Theory

2.3.6.1.

Efficient Frontier

2.3.6.2.

Capital Asset Pricing Model

2.3.6.3.

Limitations of MPT

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1. Foundations of Personal Finance

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3. Investment Vehicles and Asset Classes