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

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

by Larry E. Swedroe, Kevin Grogan, Tiya Lim

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Overview

An accessible guide that outlines the key elements of an effective financial plan

From Larry Swedroe, the author of the bestselling series of "The Only Guide" investment books, with Kevin Grogan and Tiya Lim comes a step-by-step handbook that shows you how to develop a winning personal investment strategy and reveals what it takes to make that strategy part of your overall financial plan. The Only Guide You'll Ever Need for the Right Financial Plan focuses on the "art" of investing and gives you the information you need to create a strategy that is tailor-made for your particular situation.

Designed for savvy investors and professional advisors, this book offers the vital information needed for developing and implementing an overall strategic financial plan. In this essential resource, Swedroe outlines the basics in asset allocation and other investment planning concepts.

  • Addresses how you can design an investment policy statement and an individual asset allocation plan
  • Examines how to maintain your portfolio's risk profile in the most cost-effective and tax-efficient manner
  • Offers insights on integrating risk management and estate planning issues into your plan

The Only Guide You'll Ever Need for the Right Financial Plan offers a handy tool to help you make more informed and prudent decisions that will go a long way to ensure a secure financial future.

Product Details

ISBN-13: 9781576603666
Publisher: Wiley
Publication date: 08/02/2010
Series: Wiley Global Finance Executive Select Series
Pages: 240
Sales rank: 1,041,919
Product dimensions: 6.20(w) x 9.00(h) x 0.80(d)

About the Author

LARRY E. SWEDROE is Principal and Director of Research for The Buckingham Family of Financial Services, which includes Buckingham Asset Management and BAM Advisor Services. Buckingham Asset Management manages more than $2 billion in assets for individuals, businesses, trusts, not-for-profits, and retirement plans. BAM Advisor Services provides turnkey asset management services for more than 120 registered investment advisor firms and manages or administers more than $9 billion in assets. Swedroe has held executive level positions at Prudential Home Mortgage, Citicorp, and CBS. He frequently speaks at financial conferences throughout the year and writes the blog "Wise Investing" for CBS MoneyWatch.com.

KEVIN GROGAN is an Investment Advisor Associate for The Buckingham Family of Financial Services.

TIYA LIM is an Investment Strategy Manager for The Buckingham Family of Financial Services.

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Table of Contents

Preface xv

Acknowledgments xix

Part I: Investment Strategy in an Uncertain World

Chapter 1 The Uncertainty of Investing 3

Efficient Frontier Models 5

Chapter 2 The Investment Policy Statement 9

The Foundation of the Investment Plan 10

Part II: Asset Allocation

Chapter 3 Asset Allocation 17

The Ability, Willingness, and Need to Take Risk 17

When Conflicts Arise 21

Risk Factors 22

Chapter 4 Equities 25

Equities versus Fixed Income 25

U.S. Equity versus International Equity 28

Emerging Markets 30

Value versus Growth 31

Real Estate 34

Your Home 36

Collateralized Commodity Futures (CCF) 36

Socially Responsible Investing (SRI) 39

Chapter 5 Fixed Income 41

Credit Quality 41

Short-Term versus Long-Term Maturities 42

Municipal Bonds 44

Inflation-Protected Securities 44

Short-Term Fixed Income versus TIPS 46

Chapter 6 Alternative Investments 49

Convertible Bonds: Not Recommended 49

Covered Calls: Not Recommended 50

Fixed-Income Currency Exposure: Generally Not Recommended 51

EE Bonds: Recommended 52

Emerging Market Bonds: Not Recommended 52

Equity-Indexed Annuities (EIAs): Not Recommended 53

Gold: Not Recommended 54

Hedge Funds: Not Recommended 54

High-Yield (Junk) Bonds: Not Recommended 56

Leveraged Buyouts (LBOs): Not Recommended 57

Leveraged Funds: Not Recommended 58

Master Limited Partnerships (MLPs): Not Recommended 58

Mortgage-Backed Securities (MBS):Not Recommended 58

Precious Metals Equities (PME):Not Recommended 59

Preferred Stocks: Not Recommended 60

Private Equity (Venture Capital): Not Recommended 61

Stable-Value Funds: Generally Not Recommended 62

Structured Investment Products: Not Recommended 63

Variable Annuities: Not Recommended 64

Chapter 7 Liabilities and Asset Allocation 67

Mortgages 67

Prepay the Mortgage or Increase Tax-Advantaged Savings? 69

Other Liabilities 70

Part III: Implementing the Plan

Chapter 8 Individual Securities or Mutual Funds 73

Convenience 73

Diversification 74

Size Matters 76

Advantages of Individual Securities 76

Separate Account Managers 77

A Word of Caution 78

Summary 78

Chapter 9 Active versus Passive Management 81

The Evidence 82

The Search for the Holy Grail: Why Is Persistent Outperformance So Hard to Find? 85

The Value of Economic Forecasts 87

The Value of Security Analysis 88

Buy, Sell, or Hold? 89

The Tyrannical Nature of an Efficient Market 89

The Prudent Investor Rule 90

The Benefits of Passive Investing 91

Summary 92

Chapter 10 The Asset Location Decision 95

Exceptions 96

Order of Preference 97

Additional Considerations 97

Advanced Concept 99

Balanced and Lifestyle Funds 99

Chapter 11 The Care and Maintenance of the Portfolio 101

Rebalancing 101

Tax Management Strategies 104

Final Considerations 110

Part IV: The Investment Plan and Financial Security

Chapter 12 College Savings Plans 113

529 Plans 113

Coverdell Education Savings Accounts 115

Custodial Accounts 116

U.S. Savings Bonds 117

Financial Aid Impact 118

Chapter 13 Insurance 121

Risk Management 122

Payout Annuities 124

Long-Term Care Insurance (LTCI) 127

Life Settlements 130

Chapter 14 IRAs and Retirement/Profit Sharing Plans 135

Roth versus Traditional IRA 135

Five Key Facts 136

What to Do When Retirement Plan Choices Are Poor 141

IRA Conversions 143

Chapter 15 Social Security 149

Is Social Security a Balance-Sheet Asset? 152

Double Dipping Strategy 155

Chapter 16 Determining a Safe Withdrawal Rate 157

Monte Carlo (MC) Simulations 158

In the Absence of an MC Simulator 160

The Sequencing of Withdrawals to Fund Retirement 163

Chapter 17 Planning Beyond Your Lifetime 167

Estate Planning 167

Preparing Your Heirs 168

Conclusion 173

Appendix A Effective Diversification in a Three-Factor World 175

Appendix B Dollar Cost Averaging 181

Appendix C Reverse Mortgages 185

Appendix D How to Choose an Adviser You Can Trust 191

Notes 193

Glossary 197

Index 213

What People are Saying About This

From the Publisher

"Larry Swedroes 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

"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

Customer Reviews