Choosing And Diversifying Investments
From Open Risk Manual
Definition
Choosing And Diversifying Investments. In the context of the Financial Competence Framework, Choosing And Diversifying Investments is a topic in the Planning And Managing Finances subject matter domain.[1]
Competences
Mastering the role of Choosing And Diversifying Investments in financial literacy context requires the following competences:
| Code | Competency Description | Competency Type |
|---|---|---|
| 190 | Knows the characteristics of various investment products including levels of risk, liquidity, expected performance and sustainability features or can find out easily | Knowledge |
| 191 | Knows that fees, commissions and other charges may be made for investment products and services and that these items may vary depending on the provider and the sales channel | Knowledge |
| 192 | Knows that prices for the same investment product may vary across providers and sales channels | Knowledge |
| 193 | Knows that different investment products may have different sustainability characteristics (environmental, social and corporate governance) | Knowledge |
| 194 | Understands the benefits of holding a diversified portfolio of investments | Knowledge |
| 195 | Knows why it is important to consider overall asset allocation when investing | Knowledge |
| 196 | Aware that various brokers and trading tools exist that can be accessed through different traditional and digital means | Knowledge |
| 197 | Considers risk, performance, costs and other investment characteristics when managing and monitoring investments | Skill |
| 198 | Monitors investments periodically and makes adjustments as necessary | Skill |
| 199 | Able to incorporate personal preferences with respect to investment goal, risk tolerance, time horizon and sustainability, when making an investment decision. | Skill |
| 200 | Can retrieve relevant and reliable information to inform investment decisions | Skill |
| 201 | Researches potential investments | Skill |
| 202 | Creates a diversified portfolio | Skill |
| 203 | Is able to combine various investment products such as pensions, life insurance policies, endowments, collective investment schemes or other investment products where appropriate | Skill |
| 204 | Confident and motivated to undertake research on potential investments before committing | Attitude |
| 205 | Confident and motivated to compare the level of sustainability of investment products using for example other standards, labels or ratings | Attitude |
| 206 | Confident and motivated to question investment offers that appear too good to be true | Attitude |
| 207 | Confident and motivated to compare the investment portfolio composition of pension funds, life insurance policies, endowments, collective investment schemes or other investment products in order to assess their suitability in a holistic way | Attitude |
| 208 | Confident and motivated to not to let one’s own investment behavior be guided by fear of missing out | Attitude |
| 209 | Willing to provide relevant personal information to the intermediary for a suitability assessment | Attitude |
References
- ↑ European Union/OECD (2022), Financial competence framework for adults in the European Union
