• The Open University
  • The Open University Business School

Finance Fundamentals: Investment Theory and Practice

Look at the investment choices open to you, and the risks and returns of each. Start managing your financial future effectively

65,651 enrolled on this course

A coin sits on top of a line graph on a piece of paper – a metaphor for financial investments

Finance Fundamentals: Investment Theory and Practice

65,651 enrolled on this course

  • 4 weeks

  • 3 hours per week

  • Accreditation available

  • Digital certificate when eligible

  • Open level

Find out more about how to join this course

Ensure your investments are effective and match your risk-return appetite

Research shows that UK households are poor at investment management, with a limited understanding of choices, risks and returns. This could mean that many people cannot afford to retire in future.

This online course will give you the tools to avoid this nightmare. You will study investment choices, and the risks and returns of each; investment strategies and your risk-return appetite; and behaviours that can impair effective investment decisions.

The Open University’s Centre for the Public Understanding of Finance created this course, with the generous support of True Potential LLP.

Syllabus

  • Week 1

    The Spectrum of Personal Investments

    • The image is of a piggy bank with a coin in its slot.

      The importance of personal investments

      Why should we save and invest for the future? Savings products – what do they offer?

    • This is a photograph of an electronic traders screen. To the left is a graph, and on the right are a number of share prices being tracked.

      Shares

      Understanding and investing in shares (or ‘equities’). What to look for when making decisions about share investments. Introducing the shares that we’ll be following in the course.

    • The image consists of logos from four investment fund management companies: Aviva Investors, Direct Best Invest excellence, Gerard Reid and BNY Mellon.

      Bonds and funds

      Investments in bonds. The importance of government bonds (UK ‘gilts’). The relationship between yields on bonds and their prices. Introducing the yield curve – we’ll be tracking this throughout the course. Investments in funds.

    • This photograph shows the word 'tax' printed on a piece of paper that has been cut in half. There are a pair of scissors next to the paper.

      Alternative investments, tax, advice and the costs of investing

      Other ways of investing – property, commodities and peer-to-peer. Understanding the costs of investing including taxation. When to seek advice about investments – the benefits and costs.

  • Week 2

    Devising investment strategies – principles and practice

    • This diagram is a loop of the four ‘golden rules’ – ‘time horizon’ to ‘risk appetite’ to ‘formulate strategy and invest’ to ‘review portfolio’ and back to ‘time horizon’. There are arrows outside this loop labelled to indicate investment opportunities.

      Devising your strategies: time horizons and understanding risk

      Devising an investment strategy. Time horizons and risk appetite. What are the financial risks and how are they inter-related?

    • This graph shows the risk in a portfolio plotted against the number of shares contained therein. Systematic risk remains constant, while Specific risk decreases as number of shares increases.

      Understanding and applying Portfolio Theory

      How to diversify away risk. Getting to grips with Portfolio Theory. How is this theory applied in practice by investment managers?

    • This is a graph of expected return against risk for a given portfolio. The risk-free rate, capital market line and efficient frontier are all marked, along with the betas of hypothetical portfolios G, M and F.

      Understanding and applying the Capital Asset Pricing Model (CAPM)

      Managing your investment risk profile. Understanding the Capital Asset Pricing Model (CAPM). How is CAPM applied in practice? What is the role of ‘betas’ in managing risk?

    • This image shows a share price fluctuating between a resistance and a support line, and then ascending through the resistance line to set new support and resistance lines in which the share price fluctuates.

      Market tactics and know-how: Can we outperform the market?

      The Random walk Prediction. Are financial markets efficient – understanding Efficient Markets Hypothesis (EMH). Can we outperform the markets? Is technical analysis (‘chartism’) a good predictive tool for investors?

  • Week 3

    Investment in practice: practices, styles, history and performance

    • These pie charts show the asset mix of pension funds in the UK, Germany and France. The UK mix is 58% shares, 38% bonds and and the rest in property and 'other'. France and Germany weight at roughly 75% bonds and 20% shares..

      Investment strategies in practice

      How are the theories on investment strategy applied in the real world? What practices do investment managers apply? What are the current features of investment activity – what’s currently fashionable?

    • This image shows the logos of various fund managers, for example Aviva investors and BNY Mellon.

      Measuring the performance of investments

      How do we assess how well our investments have performed? How should we judge investment managers? We look at relative returns and absolute returns on investments.

    • This is a timeline of significant politicians since 1950. Politicians featured are Winston Churchill, Howard Wilson, Ted Heath, Margaret Thatcher, Tony Blair and Gordon Brown.

      Investment performance: the lessons from history

      We examine the long-term historical evidence about the performance of different asset classes. We look at investment bubbles and at recent personal investment news stories.

    • This timeline shows rationing in the 1940s, the home television in the 1950s, The Beatles in the 1960s, David Bowie in the 1970s, Duran Duran in the 1980s and the Spice Girls in the 1990s.

      More lessons from history: what can we learn from them?

      The collapse in supermarket share prices. Have fun reviewing the past century of investment performance – and the drivers of performance in each decade.

  • Week 4

    Investment and human behaviour

    • This image shows the Lehman Brothers sign being carried into Christie's auction house.

      Behaviour and risk-taking

      How can human behaviour impair financial decision-making? Behaviour in the context of the 2007/08 financial crisis. Understanding the impact of behaviour in the business environment.

    • This image shows a silhouette of a man on a tightrope.

      Individual behaviour

      Individual behavioural biases. Learn about bounded rationality. We look at ‘prospect theory’ and the impact of ‘anchoring’ and overconfidence.

    • This illustration shows some dominos falling over and a cow sitting on some grass.

      Group behaviour

      We study group behavioural biases. We explore ‘contagion’ and ‘herd behaviour’. Do groups make better decisions than individuals? Understanding the pitfalls of ‘group think’.

    • This diagram is a loop of the four ‘golden rules’ – ‘time horizon’ to ‘risk appetite’ to ‘formulate strategy and invest’ to ‘review portfolio’ and back to ‘time horizon’. There are arrows outside this loop labelled to indicate investment opportunities.

      Rounding-up what we have learned

      We complete the course with a summary guide to investment decision making, take one last look at UK yield curve and the prices of the shares we have been tracking. You finish with an extended test covering the entire course.

Who is this accredited by?

EOCCS
EOCCS:

This course is accredited by EOCCS, the first international quality benchmark for online courses in business and management education.

When would you like to start?

Start straight away and join a global classroom of learners. If the course hasn’t started yet you’ll see the future date listed below.

  • Available now

Learning on this course

On every step of the course you can meet other learners, share your ideas and join in with active discussions in the comments.

What will you achieve?

By the end of the course, you‘ll be able to...

  • Explore the different types of personal investments and the returns they offer
  • Identify and to understand the key investment management theories
  • Identify investment management practices
  • Explore and review recent investment management stories
  • Identify and to understand the impact of behavioural factors on investment decision-making

Who is the course for?

For further information about registration, the final assessment course, your eligibility and the BA in Business Management, visit the Open University website.

What do people say about this course?

"For me, this short course threw a little more light on several dark corners of investing. Thank you for your efforts in that enterprise."

Who will you learn with?

Martin Upton

I am Director of the True Potential Centre for the Public Understanding of Finance (PUFin) at the OU Business School. Previously I was Treasurer of Nationwide Building Society.

Who developed the course?

The Open University

The Open University

As the UK’s largest university, The Open University (OU) supports thousands of students to achieve their goals and ambitions via supported distance learning, helping to fit learning around professional and personal life commitments.

  • Established

    1969
  • Location

    Milton Keynes, UK
  • World ranking

    Top 510Source: Times Higher Education World University Rankings 2020
The Open University Business School

The Open University Business School

A pioneer in flexible learning for over 30 years, The Open University Business School delivers transformational, high quality business and management education which is quality assured.

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Ways to learn

Choose the best way to learn for you!

Subscribe & save

$244.99 for a whole year

Automatically renews

Develop skills to further your career

  • Access to this course
  • Access to 1,000+ courses
  • Learn at your own pace
  • Discuss your learning in comments
  • Tests to boost your learning
  • Digital certificate when you're eligible

Cancel for free anytime

Buy this course

$109/one-off payment

Fulfill your current learning need

  • Access to this course
  • Learn at your own pace
  • Discuss your learning in comments
  • Tests to boost your learning
  • Printed and digital certificate when you’re eligible

Limited access

Free

Sample the course materials

  • Access expires 10 Mar 2025

Find out more about certificates, Unlimited or buying a course (Upgrades)

Sale price available until 3 March 2025 at 23:59 (UTC). T&Cs apply.

Find out more about certificates, Unlimited or buying a course (Upgrades)

Sale price available until 3 March 2025 at 23:59 (UTC). T&Cs apply.

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