Larry E. Swedroe, Kevin Grogan, Tiya Lim

Active versus Passive Management (eBook, ePUB)

• Format: ePub

Produktbeschreibung

The active versus passive debate is a contentious issue. Filled with concrete evidence and comprehensive money management strategies, this chapter from The Only Guide You'll Ever Need for the Right Financial Plan delves into the case for passive investing over active investing. You can do so by investing in passively managed investment vehicles like index funds and passive asset class funds. You are virtually guaranteed to outperform the majority of both professionals and individual investors. Written for savvy investors and advisors, this chapter helps you: * Integrate a passive investing strategy * Maintain your portfolio's risk portfolio in a tax-efficient manner * Determine the difference between the theories of efficient versus inefficient markets * Make cost-effective investment decisions From Larry Swedroe, the author of the bestselling series of "The Only Guide" investment books, with Kevin Grogan and Tiya Lim, this chapter helps you integrate diversification, low turnover, and asset allocation into one plan that meets the needs of a unique situation.

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Produktdetails

• Verlag: John Wiley & Sons
• Seitenzahl: 256
• Erscheinungstermin: 21. Dezember 2010
• Englisch
• ISBN-13: 9781118006566
• Artikelnr.: 37357289

Autorenporträt

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.

Inhaltsangabe

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

Rezensionen

"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