knowledge topics
Foundations of Investments
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Identify roadblocks to engaging in investment planning, such as:
- Lack of knowledge
- Cost (perceived or actual)
- Personal attitudes/choices
- Explain objectives of an investment plan, such as:
- Minimize risk
- Maximize return
- Determine risk tolerance
- Develop appropriate asset allocation
- Determine appropriate investment choices
- Explain the factors that may affect an individual’s investment plan, such as:
- Time horizon
- Risk tolerance
- Investment objective
- Liquidity needs
- Types of income required
- Stability of income required
- Marginal tax rates
- Family circumstances
- Business interests
- Integration with other objectives
- Tax attributes of the individual / entity
- Personal goals / needs / attitudes
- Explain how each of the factors may impact the suitability of an investment, such as:
- Time horizon
- Volatility
- Risk tolerance
- Investment objective
- Financial situation
- Personal situation
- Income
- Liquidity
- Control
- Tax impact
- Investment management process
- Economic cycle
- Cost
- Historical performance
- Performance expectations
- Evaluate how each of the factors may impact the suitability of an investment.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK