This is a great primer for someone just getting started with investments. It starts with a discussion of each of the four major asset classes: cash and cash equivalents, stocks, bonds, and real estate. What does each of these asset classes have to offer? The basics of the various types of risk, both systematic and unsystematic, is then covered. Why is it important to know about these different types of risk? Measuring risk is also important, and this leads to a discussion of the fundamentals of standard deviation, beta, and duration. What does measuring risk tell us? And what happens to risk when we diversify? Mutual funds and exchange-traded funds (ETFs) are discussed, and the module ends with how to do a “SWOT” analysis, and why planners need to be careful when using historical long-term return data.

Author: Jim Pasztor, MS, CFP®

Jim Pasztor, vice president of Academic Affairs at the College for Financial Planning is also involved with several of the College’s investment courses and the white paper series. He is a CFPM® practitioner, and has an MS degree in personal financial planning and an MSF degree in financial analysis, both from the College for Financial Planning. Jim was the recipient of the Edward D. Baker III Journal Award from IMCA in 2014 for his article Endogenous Risk and Dangers to Market Stability. You can reach Jim at jim.pasztor@cffp.edu.

Complexity Level: Overview