SUNConferences, 29th Annual Conference of SAIIE

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Automated Investment Assessment: An investment decision making model for the ordinary person
Melissa Van Niekerk

Last modified: 2018-09-25

Abstract


The ordinary person invests to achieve their long-term financial goals. However, choosing what to invest in can be challenging and using the services of a financial broker can be expensive. Thus, it was decided to develop a customised model to select investment portfolios for the ordinary person.

To find an optimal investment portfolio, four metrics must be considered together and thus this is a multi-objective optimisation (MOO) problem. Three simple MOO methods were used (lexicographic, weighted sum and weighted product methods) to ensure that the ordinary person using the model will be able to understand the model logic.

The model selected investment a total of 13 464 investment portfolios and the return on investment of each was calculated.  It was observed that most of the model portfolio had returns that were the same or similar. Furthermore, when compared to the returns on investment received by various unit, it was found that the model portfolios outperform the unit trusts 96% of the time. However, the time and effort required to use the model is worth more than the brokerage fees of a unit trust.  Thus, it was concluded investors should rather invest in unit trusts.


Keywords


Industrial Engineering