Investment Project Chapter 22 Implementation Application Due

Nvestment Project Chapter 22 Implementation Application Due Date

Nvestment Project: Chapter 22 Implementation & Application: Due Date of Week-7. Please discuss and analyze your own investment management process (IMP) and develop your own investment policy statement (IPS) with regard to wealth creation and retirement planning. Discuss investment objectives and constraints in the development of your IPS. Comprehensively integrate the topics learned throughout the course. The PowerPoint and the video presentation should cover the material points in tables 22.1, 22.2, and 22.3 on page 708 in the text in Chapter 22.

Each point should be focused on the construction of your own strategies for retirement/estate-planning portfolio endeavors. Table 22.1 addresses the “Components of the Investment Management Process”, to include the topics of planning, execution of the portfolio construction and revisions, and the feedback process. "Ten" slides at a minimum should be dedicated to this table’s material. Table 22.2 addresses the “Components of the Investment Policy Statement (IPS)”. Note that the nine points should be addressed in your presentation.

Remember that you are the client. This is an applied future prescriptive exercise assignment. "Nine to ten" PPT slides should be dedicated to this table’s material. Table 22.3 addresses the “Determination of Portfolio Policies”, to include the objectives and the constraints. "Two to three" PPT slides should be dedicated to this table’s material.

There should be 23 slides in total at a minimum addressed in the presentation and analysis of the tables. Please provide a Kaltura Video and a PowerPoint presentation to the appropriate, but separate, drop-boxes within the week-7 course content tab. The presentation does not have to be in an APA format, and you may utilize the first person since you are commenting on your analysis of the creation of your own IMP and IPS. A presentation of a 10-minute minimum (with a limit of 15-minutes) is required in Kaltura.

Paper For Above instruction

The development of a comprehensive investment management process (IMP) and an effective investment policy statement (IPS) is crucial for achieving wealth creation and retirement planning objectives. This paper elaborates on constructing a personalized IMP and IPS, incorporating investment objectives, constraints, and overarching strategies to ensure a successful and adaptive retirement portfolio. It synthesizes concepts from Chapters 22, particularly focusing on the components of the investment management process, the elements of the IPS, and the determination of portfolio policies.

Introduction

An investment management process (IMP) is a structured approach that guides the systematic allocation, management, and evaluation of investment assets to meet specified financial goals. For an individual focused on retirement and estate planning, imperative elements include setting clear objectives, understanding constraints, and continuously reviewing assets in light of changing market conditions. Developing an IMP tailored to personal financial circumstances is fundamental to ensuring disciplined decision-making and effective portfolio management.

Component 1: The Investment Management Process

According to Table 22.1, the components of the IMP include planning, execution, revision, and feedback. The planning phase involves establishing investment objectives rooted in retirement goals, risk tolerance, and time horizon. Execution encompasses portfolio construction based on strategic asset allocation, diversification, and security selection. Revisions involve periodic rebalancing and adjustments for evolving financial circumstances or market dynamics. Feedback mechanisms, such as performance monitoring against benchmarks, facilitate continuous improvement.

In my personal IMP design, I begin by defining clear financial goals for retirement at age 65, emphasizing wealth accumulation while maintaining an acceptable risk level. Asset classes such as equities, bonds, real estate investment trusts (REITs), and alternative investments will be included, with allocations adjusted over time to reduce risk as the retirement date approaches. Regular reviews—quarterly or biannually—help reassess portfolio performance and align investments with my changing objectives.

Component 2: Investment Policy Statement (IPS)

Table 22.2 outlines nine critical components of an IPS, including objectives, risk tolerance, time horizon, liquidity needs, and constraints related to legal, regulatory, and tax considerations. The IPS acts as a strategic blueprint that maintains discipline amid market volatility and personal financial fluctuations.

In constructing my IPS, my primary objective is to maximize growth for retirement in a manner consistent with my risk appetite, which I assess as moderate. The time horizon spans 30 years, allowing a growth-oriented approach with intermediate adjustments for risk mitigation. Liquidity needs are incorporated to cover unforeseen expenses, while constraints such as tax-advantaged account limits and regulatory requirements shape asset selection. My IPS emphasizes diversifying investments to balance growth with preservation of capital.

Component 3: Determining Portfolio Policies

Table 22.3 addresses setting specific portfolio objectives and constraints. Objectives include accumulating sufficient wealth for retirement, estate transfer, and potential legacy planning. Constraints encompass risk tolerance, liquidity needs, legal limits, tax considerations, and market conditions.

My personal portfolio policies aim to achieve approximately 7-8% annual returns, balancing risk and reward. Constraints I set include a maximum 10% allocation to each individual security for diversification, a minimum liquidity reserve of 6 months’ worth of expenses, and tax-efficient investing strategies for maximized after-tax returns. These policies guide asset allocation, sector diversification, and rebalancing strategies over the investment horizon.

Strategic Synthesis and Integration

Throughout this process, I integrate course concepts such as modern portfolio theory (Markowitz, 1952), asset allocation strategies (Brinson, Hood, & Beebower, 1986), and behavioral finance insights (Thaler, 1993). Diversification is paramount to mitigate unsystematic risk, and periodic rebalancing ensures the portfolio stays aligned with my objectives. Tax considerations, estate planning, and risk management are incorporated holistically, making the plan resilient to economic fluctuations and personal changes.

Conclusion

Constructing a personalized IMP and IPS tailored for retirement planning necessitates comprehensive planning, disciplined execution, and iterative review. By setting clear objectives, understanding constraints, and integrating key financial principles, I can craft a resilient portfolio aimed at wealth accumulation and estate transfer. This exercise underscores the importance of a structured yet flexible investment framework adaptable to life’s uncertainties, ultimately fostering financial security in retirement.

References

  • Brinson, G. P., Hood, L. R., & Beebower, G. L. (1986). Determining asset allocation. Financial Analysts Journal, 42(4), 39-44.
  • Markowitz, H. (1952). Portfolio selection. The Journal of Finance, 7(1), 77-91.
  • Thaler, R. (1993). Mental accounting and consumer choice. Marketing Science, 12(3), 265-279.
  • Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. Journal of Finance, 25(2), 383-417.
  • Graham, B., & Dodd, D. L. (1934). Security Analysis. McGraw-Hill.
  • Bogle, J. C. (1994). The virtues of passive investing. Journal of Portfolio Management, 20(4), 6-19.
  • Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442.
  • Elton, E. J., & Gruber, M. J. (1997). Modern portfolio theory and investment analysis. John Wiley & Sons.
  • Ross, S. A. (1976). The arbitrage theory of capital asset pricing. Journal of Economic Theory, 13(3), 341–360.
  • Keown, A. J., Martin, J. D., Petty, J. W., & Scott, D. F. (2019). Foundations of Finance: The Logic and Practice of Financial Management. Pearson.

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