Personal Investment: financial planning in an uncertain world

by Mariana Mazzucato, Jonquil Lowe, Alan Shipman and Andrew Trigg

Learning outcomes

Chapter 1

After reading this chapter, you will:
  • understand how banks operate and have changed
  • be able to interpret a bank’s financial accounts
  • understand systemic risk and the need for bank regulation
  • be able to describe the risk and return characteristics of savings accounts.

Chapter 2

After reading this chapter, you will:
  • understand some of the factors that may influence investment choice
  • be able to measure the intrinsic value of an investment
  • understand how investors can measure risk
  • be able to apply these measures to compare different investments.

Chapter 3

After reading this chapter, you will:
  • understand how theory and practice can be used to improve the balance between risk and return
  • be aware of the implications of diversification and the Capital Asset Pricing Model for risk–return management
  • distinguish between different types of fund and investment strategy
  • understand how performance is measured.

Chapter 4

After reading this chapter, you will:
  • understand why financial markets are important for investors
  • be aware of different types of markets and market players
  • understand the role of information in markets
  • understand the efficient markets hypothesis.

Chapter 5

After reading this chapter, you will:
  • be able to describe how economies fluctuate
  • understand key macroeconomic categories and indicators
  • be familiar with debates about the self-correcting properties of market economies
  • understand fiscal policy, monetary policy and exchange rates.

Chapter 6

After reading this chapter, you will:
  • understand the definition of an asset price bubble, and their importance in the history of market economies
  • understand why share volatility and share overvaluation raise questions regarding the rationality by which investors approach investment decisions
  • understand key insights from behavioural finance theory
  • understand the implications of different theories of investment behaviour for personal investment planning.

Chapter 7

After reading this chapter, you will:
  • understand the relationship between financial markets and financial regulation
  • understand how financial liberalisation does not remove the need for financial regulation
  • understand the development of contemporary UK financial regulation
  • have an awareness of the issues surrounding international financial regulation.

Chapter 8

After reading this chapter, you will:
  • understand how portfolio theory is applied to the issue of investing for the long term
  • have an awareness of the issues surrounding state versus private pension systems
  • understand some of the limitations of personal investment.