Asset Dedication: How to Grow Wealthy with the Next Generation of Asset Allocation

Rating:
Summary: Asset Dedication - A Must Read
Review: Asset Dedication by Dr. Stephen J. Huxley is a must read for anyone contemplating retirement and for those who must manage money during retirement years. This book is written in a style that is easy to understand and grasp, and does not assume that the reader be a major in economics. The book is written in a clear lucid style and provides a very helpful education.

What is novel about the book is that it shows for the first time, that it is possible to invest retirement savings in a manner that they meet the unique needs of each retirement situation. In other words, the books does not blindly advocate an asset mix as those found commonly on almost all mutual fund sites.

The books advocates setting aside the appropriate mix of investments in high quality Bonds, while at the same time providing exposure to Index Stock Funds. But, there is no set magic ratio like 20/80 or 40/60 for Bonds/Stocks. Instead the book advocates and shows how you can set aside just enough money for income generation while at the same time gaining exposure to the stock market in increments of 3-10 years. The basic idea is to generate income for living expenses while at the same time gaining exposure to the stock market for adequate length of time. The book does not rely on just opinions. There is plenty of hard data and analysis to back up its premises.

The calculations provided in the book can also be carried out on the Internet Site for those who would like to play out different scenarios of accumulated savings and interest rates.

This book is a must read for anyone seriously contemplating retirement or anyone who is actively managing ones accumulated savings during retirement years. It provides a different working plan and perspective and one that should be reviewed.

This book is a must read !


Rating:
Summary: The Anti-Asset Allocation Book - Fixed Formulas Are Out!
Review: If you have ever wondered exactly how much or how little science is used in determining the asset allocation formulas that your broker recommends, this book should be revealing. We, the authors, began to get suspicious about the wide spread use of the strategy when different brokers recommended different allocation formulas for the same person. If you went to three different optometrists, you would not expect to get three different prescriptions for your glasses. One of the hallmarks of science is replication of results under identical circumstances.

So we read the original academic papers that popularized asset allocation, reviewed its many critics, and used historical comparisons to test asset dedication against asset allocation, with its fixed-formula, rebalancing approach. Asset dedication is an investment strategy that has been used for years by high-end financial professionals who must manage cash flow demands, the same problem retired people face.

Lo and behold, the asset dedication strategy beat all asset allocation strategies with less than 80 percent stocks in the majority of decades over a variety of time periods from 2003 back to 1990, 1976, 1947, and 1926 using only US Treasury bonds and index funds. Asset dedication is also a low cost, passive strategy that has no "magic formulas." No wonder the pros who have to deal with cash flows prefer it. Asset dedication is to asset allocation what passive index funds are to active mutual funds - cheaper, easier, and better. Its superior performance based on our statistical research compelled us to report the results. That is why we wrote this book.

The book describes in detail how asset dedication is designed to deal directly with the investment situation that retired people or those nearing retirement face. It will produce identical recommendations for identical circumstances and creates a designer portfolio customized to each investor's specific individual needs rather than using a one-size-fits-all "model portfolio" approach.

The book also introduces the "critical path" concept for retirement planning by younger people and is supported by an online web site (www.assetdedication.com). Professional financial planners are now beginning to look to asset dedication as either the next generation of asset allocation or a whole new paradigm in personal investment strategy. It works. The evidence is in the book. See for yourself.