Investing Strategies for the High Net-Worth Investor: Maximize Returns on Taxable Portfolios

by Gannon, Niall

• ISBN13: 9780071628204
• ISBN10: 0071628207
• Edition: 1st
• Format: Hardcover
• Copyright: 2009-12-28
• Publisher: McGraw-Hill Education

Summary

Investing Strategies for the High Net-Worth Investorshowcases.an investing approach that helps readers live.debt-free, own quality tax-free bonds, create a diversified.portfolio, and amass mountains of wealth to hand.down to future generations. Focusing on bonds over.stocks, renowned private wealth manager Niall J..Gannon offers a framework for investing in tax-friendly.asset classes. Readers will gain critical insight for building.a solid portfolio.

Author Biography

Niall J. Gannon is the lead member of the.Gannon Group at Smith Barney and director of the Portfolio.Management Institute and of the Institute for Private.Investors.

Table of Contents

Acknowledgments	p. xi
Introduction	p. xiii
Developing an Understanding of the Wealth Creative Process as a Long-Term Business Owner: How Did the Wealthy Achieve Their Success, and Do Those Same Traits Translate into Investing?	p. 1
Institutional Misallocation	p. 6
Do the Math	p. 9
Multigenerational Obstacles	p. 11
Conclusions	p. 13
Market History	p. 15
Misleading Long-Term Returns	p. 16
Herd Mentality	p. 20
New Paradigms	p. 23
Reinventing the Wheel	p. 27
Tuning Out the Market	p. 31
Conclusions
After-Tax Returns on Stocks versus Bonds for the High Tax Bracket Investor	p. 35
After-Tax Returns on Stocks 1957-2009	p. 39
Observations of After-Tax Return Variations by State of Residence	p. 43
Returns for Different Portfolio Turnover Rates	p. 44
Liquidation	p. 48
Bonds versus Equities	p. 49
Conclusions	p. 52
Asset Allocation for the Taxable Investor	p. 53
Earnings Drive Stocks; Coupons Drive Bonds	p. 55
Meltdown Math	p. 58
After-Tax Calculator	p. 60
Managing Expenses	p. 62
Portfolio Management	p. 65
Picking Stocks	p. 67
Case Study	p. 70
A Global Approach to Portfolio Management	p. 72
Muni Strategy	p. 74
Conclusions	p. 78
Municipal Bonds: The Forgotten Asset Class	p. 79
What Are Municipal Bonds?	p. 80
History of Municipal Bond Yields	p. 81
History of Municipal Bond Defaults	p. 83
Defaults during the Great Depression	p. 84
Characteristics of the 1929-1937 Default Period	p. 86
Postwar Period, 1945-1965	p. 87
Defaults during 1965-2008	p. 87
Price Sensitivity of Municipal Bonds over Time	p. 89
Classes of Municipal Bonds	p. 90
Strategies for Investing in the Municipal Bond Market	p. 92
Traditional Municipal Bond Portfolio	p. 93
Home State versus National Portfolio	p. 96
Zero Coupon Municipal Bonds	p. 97
Black Swans, the Unforeseen, and Stress Testing	p. 99
Conclusions	p. 100
Are Alternative Investments a Necessary Component of a Diversified Portfolio?	p. 103
Commodities	p. 105
Currencies	p. 108
Hedge Funds	p. 109
Private Equity	p. 112
Conclusions	p. 115
A History of Taxation at the Top Bracket and the Effect of Taxation on the Long-Term Compounding of Assets	p. 117
Income Tax	p. 118
Adjusting Your Portfolio to Suit the Times	p. 122
Capital Gains Tax	p. 125
Estate Tax	p. 129
Gift Taxes	p. 135
Conclusions	p. 138
Strategies for Optimizing Portfolios: Taxation, Performance, and Fees	p. 139
Calculator Case Studies	p. 141
Liquidity Event Optimization	p. 146
Fee Optimization	p. 150
Performance Reporting	p. 152
Personalized Performance Measurements	p. 155
Conclusions	p. 159
Active versus Passive: How Does an Investor Decide?	p. 161
Index Performance Claims	p. 162
Index Fund Objectives versus Active Fund Objectives	p. 164
Fundamental Indexing	p. 166
Conclusions	p. 169
A New Way to Look at Risk	p. 171
Misleading Muni Fund Stats	p. 173
Portfolio Stress Tests	p. 175
Better Risk Measurements	p. 178
Valuation Risk	p. 180
Leverage Risk	p. 182
Conclusions	p. 185
The Investing Habits of Institutions	p. 187
Pensions	p. 187
Pension Benefit Guaranty Corporation (PBGC)	p. 190
Endowments	p. 194
Yale Endowment	p. 195
Harvard Endotvment	p. 196
NACUBO	p. 197
Conclusions	p. 199
The Investment Habits of Wealthy Families	p. 201
Expected After-Tax Returns for Wealthy Family Taxable Portfolios	p. 207
Higher Returns with Fewer Managers	p. 208
Tax Strategies Employed by IPI Families	p. 209
Wharton Global Family Alliance	p. 210
Conclusions	p. 214
Multigenerational Planning	p. 215
Can a Portfolio Sustain a Family's Lifestyle across Multiple Generations?	p. 215
The Yale Portfolio	p. 218
Unconventional Conventional Thinking	p. 224
Gifting Strategies	p. 227
Private Equity	p. 229
Conclusions	p. 231
A Case Study to Prove the Correlation between Earnings and Stock Price: Jones Pharma	p. 233
The Building Blocks of Success after the Initial Public Offering	p. 239
Preparing for the New Millennium	p. 240
Terms of the Deal	p. 242
Jones Pharma: Lessons for Investors	p. 243
Lessons for Wealthy Families Who Have Sold the Family Business	p. 243
Lessons Learned with Respect to Volatility of Investments	p. 244
Conclusions	p. 245
Train Wrecks: Avoiding the Most Common Mistakes as an Investor	p. 247
Mr. Train	p. 248
Train Wreck 2	p. 252
Lessons Learned	p. 258
Conclusions	p. 261
Wealth Management Strategies and a Comparison of Various Models: Family Office, Full-Service, and Direct Wealth Management Firms	p. 263
Family Office	p. 264
Full-Service Wealth Management	p. 267
Direct Wealth Management	p. 271
Finding the Right Advisor	p. 277
Holistic Financial Planning	p. 279
Endnotes	p. 287
Index	p. 295
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