UGBA 10 Lecture Notes - Lecture 8: Fiduciary, Tax Efficiency, Efficient-Market Hypothesis
23 May 2018
School
Course
Professor
Personal Financial Planning February 8
I. Personal financial planning
• Planning in a way that helps you achieve your life goals
o Secure a good place to live
o Use debt wisely
o ACCUMULATE capital for various purposes
II. Iestets are’t eerthig
• You need to manage you r human capital
o Career is your fundamental surface of value to fund your investments
o Maximize your capabilities
o No efficient market for your services
o Position yourself, network, and maximize our personal value
III. Themes
• There is an increasing reliance on self-directed investment decisions, and difficult too
• Ca’t trust rokers to ork i our iterest the do’t hae a fiduiar dut to ou
o Put your interest first
IV. New realities of retirement planning
• Decreasing number of defined benefit pension
• Increasing proportion of defined contribution schemes
• Elderly people and single older Americans depend on Social Security for more than half
of their income
• Independent Contractor Model: little or no provision for pensions and benefits.
V. Pension/contributions
• What you get after you retire; sometimes inflation adjusted
• Contribution: what the employee and sometimes employer puts in during the working
life of the employee.
VI. Defined benefit (DB) scheme
• Defined benefit: provides a known post retirement income, generally a percentage of
final salary per year of employment with the organization
o Employer pays in during working life of the employee
o Characteristic of defense industries, local/state/federal governments
• Defined contribution: iests the eploer’s otriutio
o Employee or company pays in while working life
o Employee takes the risk by selecting investments
VIII. IRA- Individual Retirement Account
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UGBA 10 Full Course Notes
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