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The Open University

Managing my investments

The Open University via OpenLearn

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Overview

On this free online course, you'll learn about different investment choices, the returns and risks associated with each, and the evidence about their historical performance. You'll explore investment strategies, as well as the practicalities about involvement in personal finance markets. And you'll look at how to avoid the individual and group behavioural traits that can impair effective investment decision making. Research shows that UK households are poor at investment management with a limited understanding of investment choices, risks and returns. The resultant 'savings gap' threatens a scenario where many cannot afford to retire.Elsewhere households fail to plan properly, to make their investment choices fit with their risk appetites and the time horizons for access to their funds. This course aims to give you the tools to avoid these personal finance nightmares.Throughout, the course will provide recent and current case studies on investment issues, to demonstrate how the ideas and issues explored in the course are reflected in the arena of personal investments.Managing my investments aims to give you the knowledge and confidence to take charge of your investments and your financial future.Please note that the forum referred to in course videos is nolonger available.This course is presented on OpenLearn with the kind support of True Potential LLP. If you want to know more about the work of the True Potential Centre for the Public Understanding of Finance (PUFin) and its mission to improve personal financial capability, check out the centre's website. The centre, generously funded by True Potential LLP, has a mission to develop teaching and undertake research to help improve public financial capability.This course is intended for those with an interest in developing their personal financial skills to make good decisions when managing their finances and buying financial products. The course does not require any previous experience of studying this subject.This course has generously been supportedby Harrison Centre for Social Mobility,  whoseaim is to make a difference in social mobility througheducation, training and skills development. For more information about thecharity go to HarrisonCentre for Social Mobility.By enrolling on this course you can track your progress and gain a Statement of Participation for completing the whole course.

Syllabus

  • Week1Week 1: Why and how should we invest for the future?
  • Introduction
  • 1.1 Savings and investments
  • 1.1.1 Why should we save and invest?
  • 1.1.2 Why are savings and investments important for the economy?
  • 1.1.3 Savings and the life course
  • 1.2 Savings behaviour in the UK
  • 1.2.1 UK household investments (excluding pensions)
  • 1.2.2 The UK’s savings ratio
  • 1.2.3 How the housing market affects savings activity
  • 1.2.4 Savings in an international context
  • 1.2.5 Why aren’t we saving and investing more?
  • 1.2.6 Investment and retirement planning: the UK experience
  • 1.3 Investment planning needs a long-term perspective
  • 1.3.1 Retirement: the longest time horizon
  • 1.3.2 Investment returns
  • 1.3.3 Drivers of returns: what determines the level of interest rates?
  • 1.3.4 Real interest rates
  • 1.3.5 The benefit to savers of compound interest
  • 1.3.6 Case study: whatever happened to UK savings rates?
  • 1.4 The drivers of equity markets
  • 1.4.1 Oil prices and the financial markets
  • 1.4.2 Drivers of share prices: company specific performance
  • 1.4.3 Why did the FTSE 100 behave like a rollercoaster in 2016?
  • 1.5 Week 1 quiz
  • Week 1 round-up
  • References
  • Acknowledgements
  • Week2Week 2: The spectrum of personal investments
  • Introduction
  • 2.1 Variable rate and fixed rate savings products
  • 2.1.1 Spot the highest Annual Equivalent Rate (AER)
  • 2.1.2 Savings accounts on offer
  • 2.1.3 Why savings rates differ
  • 2.1.4 Savings accounts – are there risks?
  • 2.2 Investing in shares
  • 2.2.1 More on shares
  • 2.2.2 When do shares offer good value?
  • 2.2.3 Shares – more on when they are good value
  • 2.2.4 Share valuation
  • 2.2.5 Shares to follow
  • 2.3 Bonds (fixed interest investments)
  • 2.3.1 Gilts: UK government bonds
  • 2.3.2 Gilts and the risk-free yield curve
  • 2.3.3 Corporate bonds and their pricing
  • 2.3.4 Investment funds
  • 2.3.5 Investment funds: alternative risk profiles
  • 2.3.6 Investment funds: how to choose between them
  • 2.4 Investing in commodities
  • 2.4.1 Investing in peer-to-peer products
  • 2.4.2 Housing as an investment
  • 2.4.3 Buy-to-let
  • 2.4.4 What are the risks?
  • 2.4.5 Taxation
  • 2.4.6 Transaction costs
  • 2.4.7 Where to transact and when to seek advice
  • 2.4.8 Do I need financial advice or should I go it alone?
  • 2.5 Week 2 quiz
  • Week 2 round-up
  • Further reading
  • References
  • Acknowledgements
  • Week3Week 3: Devising investment strategies – principles and practice
  • Introduction
  • 3.1 Time horizons and goals
  • 3.1.1 Knowing the risks
  • 3.1.2 Risk interrelationships
  • 3.1.3 Do we really understand our appetite for risk?
  • 3.2 Diversifying investments dilutes risk
  • 3.2.1 Understanding portfolio theory
  • 3.2.2 Applying portfolio theory
  • 3.2.3 The relevance of the size of the portfolio
  • 3.2.4 Share diversification in practice
  • 3.3 Introducing the Capital Asset Pricing Model (CAPM)
  • 3.3.1 How fund managers apply CAPM
  • 3.3.2 What do we mean by ‘the market’?
  • 3.3.3 To track or not to track?
  • 3.3.4 Market timing: can you outperform the market?
  • 3.4 Understanding the efficient markets hypothesis
  • 3.4.1 The random walk prediction
  • 3.4.2 Technical analysis: reliable sat-nav or bogus science?
  • 3.4.3 Technical analysis: some key features
  • 3.4.4 Can investors really beat the market?
  • 3.5 Week 3 quiz
  • 3.5.1 Monitoring shares, gilts and Bank Rate
  • Week 3 round-up
  • Further reading
  • References
  • Acknowledgements
  • Week4Week 4: Investment in practice – practices, styles, history and performance
  • Introduction
  • 4.1 Investor activity – evidence from the industry
  • 4.1.1 Age and lifestyling
  • 4.1.2 Cultural issues
  • 4.1.3 International diversification
  • 4.2 Relative returns
  • 4.2.1 Alternative measures
  • 4.2.2 Analysing a fund’s performance
  • 4.2.3 Absolute returns
  • 4.2.4 The reporting of performance
  • 4.2.5 Assessing a portfolio’s performance
  • 4.3 Historic returns from different asset classes
  • 4.3.1 Historic returns: proof that the time horizon is crucial
  • 4.3.2 Bubbles
  • 4.3.3 Google: success story or a bubble yet to burst?
  • 4.3.4 Privatisations and demutualisations – easy money?
  • 4.3.5 Precipice bonds
  • 4.3.6 Precipice bonds – mis-selling or mis-buying?
  • 4.4 Supermarkets – low betas but high risk?
  • 4.4.1 Different decades, different returns
  • 4.5 Week 4 quiz
  • Week 4 round-up
  • References
  • Acknowledgements
  • Week5Week 5: Investing for retirement – planning your pension
  • Introduction
  • 5.1 Investing for a pension
  • 5.1.1 How much do you need?
  • 5.1.2 State pensions
  • 5.1.3 The new flat-rate state pension
  • 5.1.4 Understanding the new flat-rate pension
  • 5.2 Occupational pensions
  • 5.2.1 Workplace pensions
  • 5.2.2 Workplace pensions: NEST
  • 5.2.3 Personal pensions
  • 5.3 Calculating pension income
  • 5.3.1 Understanding career average pension schemes
  • 5.3.2 Funded and pay-as-you-go pensions
  • 5.3.3 Take control
  • 5.4 The 2015 pensions revolution: freeing up access to pension pots
  • 5.4.1 Learning from the Dutch: collective defined contribution schemes
  • 5.4.2 The challenges of the pension revolution
  • 5.5 Week 5 quiz
  • Week 5 round-up
  • References
  • Acknowledgements
  • Week6Week 6: Investment and human behaviour
  • Introduction
  • 6.1 Questions answered
  • 6.2 Behaviour and risk
  • 6.2.1 Risk and the global financial crisis: the great eye-opener
  • 6.2.2 Human behaviour in the business environment
  • 6.2.3 Risk and the business environment
  • 6.3 Bounded rationality
  • 6.3.1 Prospect theory
  • 6.3.2 Anchoring
  • 6.3.3 Overconfidence
  • 6.3.4 Emotions and investment decisions
  • 6.4 Contagion
  • 6.4.1 Herd behaviour
  • 6.4.2 Groupthink
  • 6.4.3 Understanding behavioural finance: some practical examples
  • 6.5 Monitoring shares, gilts and Bank Rate
  • 6.6 Your investment management check-list
  • 6.7 End-of-course quiz
  • End-of-course round-up
  • Further reading
  • References
  • Acknowledgements

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