The Only Guide You'll Ever Need for the Right Financial Plan Managing Your Wealth, Risk, and Investments

by Swedroe, Larry E.; Grogan, Kevin; Lim, Tiya

• ISBN13: 9781576603666
• ISBN10: 1576603660
• Edition: 1st
• Format: Hardcover
• Copyright: 2010-08-02
• Publisher: Bloomberg Press

Summary

Praise for The Only Guide You'll Ever Need for the Right Financial Plan"Larry Swedroe's work comes as close to being the definitive investment book of our time as any that I can imagine. His greatest gift is his ability to communicate with profound simplicity, bringing clarity to the daunting challenge facing investors who are intent on reaching their financial goals."-BILL SCHULTHEIS, author of The Coffeehouse Investor"If you're looking to sharpen your financial thinking, let Larry Swedroe be your guide. With insights from The Only Guide You'll Ever Need for the Right Financial Plan, you should be able to raise your financial game-and maybe boost your family's wealth."-JONATHAN CLEMENTS, author of The Little Book of Main Street Money"Just as every successful builder needs a blueprint, so too does every successful investor need a personally tailored investment policy. How much stocks, how much bonds? Foreign versus domestic? When and how to begin Social Security or withdrawing from your IRA? Larry Swedroe plots your financial life from cradle to grave (and even beyond). Don't invest without it!"-WILLIAM BERNSTEIN, author of The Four Pillars of Investing"This is a most excellent book! Either as a great educational read or an indispensible reference, The Only Guide You'll Ever Need for the Right Financial Plan will pay you back many times over the cover price."-HAROLD EVENSKY, President, Evensky & Katz Wealth Management"If you have investing experience and want to improve your portfolio, this is the book to read."-TAYLOR LARIMORE, coauthor of The Bogleheads' Guide to Investing

Author Biography

Larry E. Swedroe is principal and director of research for Buckingham Asset Management, which manages more than $1.9 billion in assets. Buckingham also provides turnkey asset management for some 110 financial advisory firms in the United States. Swedroe  has held executive level positions at Prudential Home Mortgage, Citicorp, CBS, and he  frequently speaks at financial conferences throughout the year.

Kevin Grogan is an analysis support associate for Buckingham Asset Management.

Tiya Lim is an investment strategy manager for Buckingham Asset Management.
 

Table of Contents

Preface	p. xv
Acknowledgments	p. xix
Investment Strategy in an Uncertain World
The Uncertainty of Investing	p. 3
Efficient Frontier Models	p. 5
The Investment Policy Statement	p. 9
The Foundation of the Investment Plan	p. 10
Asset Allocation
Asset Allocation	p. 17
The Ability, Willingness, and Need to Take Risk	p. 17
When Conflicts Arise	p. 21
Risk Factors	p. 22
Equities	p. 25
Equities versus Fixed Income	p. 25
U.S. Equity versus International Equity	p. 28
Emerging Markets	p. 30
Value versus Growth	p. 31
Real Estate	p. 34
Your Home	p. 36
Collateralized Commodity Futures (CCF)	p. 36
Socially Responsible Investing (SRI)	p. 39
Fixed Income	p. 41
Credit Quality	p. 41
Short-Term versus Long-Term Maturities	p. 42
Municipal Bonds	p. 44
Inflation-Protected Securities	p. 44
Short-Term Fixed Income versus TIPS	p. 46
Alternative Investments	p. 49
Convertible Bonds: Not Recommended	p. 49
Covered Calls: Not Recommended	p. 50
Fixed-Income Currency Exposure: Generally Not Recommended	p. 51
EE Bonds: Recommended	p. 52
Emerging Market Bonds: Not Recommended	p. 52
Equity-Indexed Annuities (EIAs): Not Recommended	p. 53
Gold: Not Recommended	p. 54
Hedge Funds: Not Recommended	p. 54
High-Yield Junk) Bonds: Not Recommended	p. 56
Leveraged Buyouts (LBOs): Not Recommended	p. 57
Leveraged Funds: Not Recommended	p. 58
Master Limited Partnerships (MLPs): Not Recommended	p. 58
Mortgage-Backed Securities (MBS): Not Recommended	p. 58
Precious Metals Equities (PME): Not Recommended	p. 59
Preferred Stocks: Not Recommended	p. 60
Private Equity (Venture Capital): Not Recommended	p. 61
Stable-Value Funds: Generally Not Recommended	p. 62
Structured Investment Products: Not Recommended	p. 63
Variable Annuities: Not Recommended	p. 64
Liabilities and Asset Allocation	p. 67
Mortgages	p. 67
Prepay the Mortgage or Increase Tax-Advantaged Savings?	p. 69
Other Liabilities	p. 70
Implementing the Plan
Individual Securities or Mutual Funds	p. 73
Convenience	p. 73
Diversification	p. 74
Size Matters	p. 76
Advantages of Individual Securities	p. 76
Separate Account Managers	p. 77
A Word of Caution	p. 78
Summary	p. 78
Active versus Passive Management	p. 81
The Evidence	p. 82
The Search for the Holy Grail: Why Is Persistent Outperformance So Hard to Find?	p. 85
The Value of Economic Forecasts	p. 87
The Value of Security Analysis	p. 88
Buy, Sell, or Hold?	p. 89
The Tyrannical Nature of an Efficient Market	p. 89
The Prudent Investor Rule	p. 90
The Benefits of Passive Investing	p. 91
Summary	p. 92
The Asset Location Decision	p. 95
Exceptions	p. 96
Order of Preference	p. 97
Additional Considerations	p. 97
Advanced Concept	p. 99
Balanced and Lifestyle Funds	p. 99
The Care and Maintenance of the Portfolio	p. 101
Rebalancing	p. 101
Tax Management Strategies	p. 104
Final Considerations	p. 110
The Investment Plan and Financial Security
College Savings Plans	p. 113
529 Plans	p. 113
Coverdell Education Savings Accounts	p. 115
Custodial Accounts	p. 116
U.S. Savings Bonds	p. 117
Financial Aid Impact	p. 118
Insurance	p. 121
Risk Management	p. 122
Payout Annuities	p. 124
Long-Term Care Insurance (LTCI)	p. 127
Life Settlements	p. 130
IRAs and Retirement/Profit Sharing Plans	p. 135
Roth versus Traditional IRA	p. 135
Five Key Facts	p. 136
What to Do When Retirement Plan Choices Are Poor	p. 141
IRA Conversions	p. 143
Social Security	p. 149
Is Social Security a Balance-Sheet Asset?	p. 152
Double Dipping Strategy	p. 155
Determining a Safe Withdrawal Rate	p. 157
Monte Carlo (MC) Simulations	p. 158
In the Absence of an MC Simulator	p. 160
The Sequencing of Withdrawals to Fund Retirement	p. 163
Planning Beyond Your Lifetime	p. 167
Estate Planning	p. 167
Preparing Your Heirs	p. 168
Conclusion	p. 173
Effective Diversification in a Three-Factor World	p. 175
Dollar Cost Averaging	p. 181
Reverse Mortgages	p. 185
How to Choose an Adviser You Can Trust	p. 191
Notes	p. 193
Glossary	p. 197
Index	p. 213
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