Investing in Real Life

11/25/2013  -  News-Investment-175The ABA calls it “Essential Financial Guidance” and offers four books that “will benefit any lawyer that represents clients in the financial sector.” This semester Professor Richard Wood covers the same ground in his Financial Investment workshop, which is part of Capital University’s new Student Development Workshop Program that covers topics not normally addressed by law school courses but critical to success.

Professor Wood’s workshop is designed to demystify the complex world of financial investment and provide students with the tools they need to understand money management.

Professor Wood provides his 37 students with a model client profile that describes a woman in the middle of her professional career with $1 million to invest. She wants a 5 percent return, low risk and low taxes.

Students learn about investment vehicles such as managed and non-managed funds (mutual funds and ETFs), Real Estate Investment Trusts (“REIT’s”), annuities, bonds, equities and commodities. They learn to evaluate those investment vehicles using tools such as price/earnings ratios, Alpha, Beta and VIX. Instructional web sites such as CNBC are used to supplement class discussion of those tools and provide research for specific investments.

Students are asked to enroll in a free investment club game online where they put their theory into practice. In the final stage of the workshop, students prepare an investment plan for their client that explains the reasons for each investment decision recommended by the student.

Professor Wood will evaluate those plans and provide his opinion about students’ success or failure to meet the investment goals of the model client. No separate grade is earned for participating in the workshop, but those whose investment plans pass muster get a 3 percent increase in their final exam score for Federal Personal Income Tax.

Kevin Soucek ’14, one of the students in Professor Wood’s Investment workshop, designed a diversified portfolio that balanced risk using equities with an average Beta of .73 and bond funds yielding an average of 5.1 percent.

“It’s not just about earning the highest returns,” explains Professor Wood. “It’s important that the risk profile and the yields of the investments selected for the client match the client’s tolerance for risk and return on investment.”

Another student, Kyle Gerlach ’15, broadened his understanding of the market and business. “I am building a well-rounded understanding of the marketplace. That knowledge will be invaluable in future business ventures.”