To pass this unit the student needs to (1) Achieve an aggregate mark of 50 or more, and; (2) Pass the Final Exam.

CLASSES

Face-to-Face Teaching: Generally 18 hours.

Timetable: Detailed timetable for classes are on the Centre’s website at www.mafc.mq.edu.au

Consultation Times: 

Students who wish to contact any of the teaching staff may do so through:

• iLearn, in relation to general queries (so that all students may benefit); or
• Individual consultation with the lecturer by email in the first instance, if necessary.

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: There is no text for this unit.

Lecture Notes: Available in printed form and electronically via iLearn. Students should make themselves familiar with the notes ahead of the lectures.

Additional Readings: 

• Additional readings are included in the unit notes and or iLearn. 
• Students should assume these readings are examinable unless otherwise advised.

Study Problems: 

• Students are required to work systematically through end of chapter problem sets. These problems will not be collected but they will help you prepare for the exams. Answers, but not worked solutions, to set problems are provided on iLearn.

Pre-unit Materials: 

• Information papers on statistics, regression, accounting and other material may be found at http://mafcstudents.mq.edu.au/new-to-mafc/pre-course-materials/
• Students should work through this material prior to commencing the degree.  
• The material will remain a useful reference as students progress through the program.

Calculators: 

• A financial calculator that can handle time value of money calculations, logs and power functions is required.
• The Hewlett Packard calculator hp17bII+ is recommended.
• In examinations, hand held calculators are permitted. Mobile phones and computers are not permitted.

Assumed Access:

• Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.
• Also assumed is access to a Web browser (e.g. Internet Explorer or Firefox) and email software and a student’s own connection to an internet service provider.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site: 

• Found by logging on to iLearn ilearn.mq.edu.au, then clicking on AFCP855 Life Cycle Investing.
• This is where you will find a link to forums, downloadable resources and other important pages.
• Forums allow you to communicate with other students and lecturer(s) and may provide supplementary material.
• You are requested to post questions to forums at least 24 hours prior to an assignment submission date or examination date. Questions posted after that time may not be answered. Please try to not leave your questions to the last few days.

Important Notice: 

• It is important that you familiarise yourself with iLearn.
• Students should check iLearn regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions.

The sections are covered over 6 lectures.

TOPIC 1: INTRODUCTION TO LIFE CYCLE INVESTING

1.1.        Introduction to Life Cycle Analysis

1.2.        Life Cycle of liabilities?

1.3.        Industry Background       

1.4.        What is the safe withdrawal rate?

TOPIC 2 : THE PROBLEM TO SOLVE 

2.1.        State as an asset-liability problem

2.2.        Life Cycle cash flows

2.3.        Developing a Life Cycle Cash Flow Model

2.4.        How do you solve this problem

2.5.        Analyse investment volatility

TOPIC 3:   TECHNIQUES TO SOLVE THE INVESTMENT STRATEGY PROBLEM

3.1.        Solving the LCI problem

3.2.        Case studies: Some known solutions

3.3.        Apply Monte Carlo technique

3.4.        Using the Monte Carlo technique

TOPIC 4: APPLY TO VARIOUS CASES

4.1.        Introduction

4.2.        Estimated retirement outcomes for a young person

4.3.        Is there time for an empty nester to improve their retirement outcome?

4.4.        Now that I’m at my retirement date, what can I spend?

4.5.        Case study: Safe withdrawal rates

TOPIC 5: ROUND OUT THE SOLUTION

5.1.        Longevity risk

5.2.        Impact of social security

5.3.        Inflation risk

5.4.        Sequencing risk

5.5.        Concepts to add additional features

TOPIC 6: MANAGING THE END GAME: TECHNIQUES TO MANAGE THE UNCERTAINTIES IN RETIREMENT

6.1.        Recap

6.2.        Monitor, assess and adjust

6.3.        Strategies to manage some risks

6.4.        In class exercise - monitoring

This Unit Guide may be subject to change. Students will be advised, via an "Announcement" on iLearn, if the Unit Guide is changed.

The latest version is available at https://unitguides.mq.edu.au/.

Students should read the Unit Guide carefully at the start of term. It contains important information about the unit. If anything is unclear, please consult one of the unit lecturers.

University Policy on Grading:

• Macquarie University’s Academic Senate has established a Grading Policy available at http://www.mq.edu.au/policy/docs/grading/policy.html. Your final result will include: 
  • A Grade ranging from Fail Hurdle to High Distinction; and
  • A numerical Mark, which is a summation of the individual assessment components, providing the examination component is passed.
• It is important to note:
  • The Policy does not require that a minimum or maximum number of students are to be failed in any unit; 
  • Grades will not be allocated to fit a predetermined distribution; and
  • Grades for all individual assessment items will be released to students, but Marks may not necessarily be released,

Specific Unit Grading: 

• To pass this unit the student needs to (1) Achieve an aggregate mark of 50 or more, and; (2) Pass the Final Exam.
  • Students who have attained a total raw mark of 50% or greater in a unit, but have failed the unit’s exam requirement and who have demonstrated “sufficient effort” in the exam, will be granted a single opportunity to sit a Supplementary Exam which will be graded on a pass/fail basis. The unit Mark and Grade for students who pass this examination will be those corresponding to the original total raw mark of all their assessment tasks, including the original exam. That is, the Supplementary Hurdle Exam only determines the meeting of the hurdle requirement. Students who have attained a raw mark of 50% or greater in a unit, yet failed all attempts at the requirement, will be awarded an Fail Hurdle grade with a final Mark of 49.
• All final Marks and Grades in the Applied Finance Centre are determined by a grading committee and are not the sole responsibility of the Unit Convenor.

Review of Grade and final examination Script viewing:

• A student who has been awarded a final grade for a unit and who does not believe it is an accurate reflection of their performance, and has grounds for such a claim and can demonstrate those grounds, may apply to have their grade reviewed. 
• For information on requesting a review of grade and/or viewing your final exam script, please refer to the University’s Grade Appeal Policy at http://www.mq.edu.au/policy/docs/gradeappeal/policy.html and MAFC Program Rules at http://www.mafc.mq.edu.au.