Customer Reviews

Asset Allocation For Dummies

5 star:		(10)
4 star:		(0)
3 star:		(2)
2 star:		(1)
1 star:		(1)

 

 

This book makes an important but potentially heavy topic actually fun to read about. A nice sense of humor runs throughout, starting with the cover. No surprise that the text is written for "regular folks," as part of the "Dummies" series, but what did surprise me is how much useful information is packed into it. Besides asset allocation, the authors cover specific investment options, tax considerations, and how to pick a financial advisor if you decide to seek professional guidance. And the way the book is organized makes it very practical to use as a reference guide. Key concepts are concisely summarized up front; there's more detail on specific topics in later chapters, whenever you're ready for it.

By profession I'm a financial writer whose main audience is institutional investors. I was struck by how the authors take the same approach to asset allocation as the most sophisticated and successful pension and endowment funds, and make it all accessible to the layman.

The book has a clear goal in mind -- giving you all the information you need to be a successful long-term investor, without devoting your life to it or becoming a numbers geek -- and meets that goal exceedingly well.

First, let me explain that I am an inveterate stock picker and market timer. And, as a hobbyist, I've been pretty good at it. But as a responsible husband and father of two, I'm not reckless enough to think that my family's future should hinge on my continued ability to pick the right stocks and guess when the market is going to turn the next corner. Besides, the meltdown of the fall of 2008 shook me. I want to invest the bulk of the family assets in a way that might not be as exciting, but is a lot more reliable as far as securing our future lifestyle is concerned. That's what led me to the asset allocation approach. I searched a few titles for a primer on the subject and finally found this one. It's crystal clear in explaining asset allocation and how it works. It goes beyond that, too, in explaining rebalancing, how to locate assets in different accounts to save on taxes, how to find the right investments (stocks, bonds, real estate, commodities, mutual funds, exchange traded funds, etc.) at the lowest cost, how to tie our investments into our long-term financial plan, etc., etc. And the case studies really hit home. What really struck me, though, is that this is no simpleton's guide to investing -- the stuff that's covered is actually pretty sophisticated, but I can't imagine it being explained any more understandably than it is here. I would heartily recommend this book to all the do-it-yourselfers out there. You know, I would even recommend it to those who have financial advisors, since this book will make you a much more informed buyer of advice during these days when it's hard to trust anyone with your money. The chapter on how to grill an advisor before you hire one is worth the price all by itself.
[5 stars]

I was reading Asset Allocation for Dummies on the subway recently and a man leaned over and whispered in my ear "Well, the current economic drawback has proven that asset allocation doesn't work anymore". Actually, its quite the contrary. Because of the current downturn and ongoing volatility, proper asset allocation is needed more than ever. Many people confuse asset allocation with just the stock market and stock picking. The fact is, you have to put your money somewhere, and active and knowledgeable asset allocation is the only way to protect yourself. You have to sprinkle it around, diversify and come up with a plan that best suits your goals.

I am a bookkeeper and business manager and have read a variety of financial advisory books. I picked Asset Allocation for Dummies because I recently fired my financial planner because he was not as engaged as I would have liked. I decided to take matters into my own hands. More than anything, this book has helped me to focus on the task at hand. The Dummies books are written in a comfortable colloquial manner, simple and to the point. But it is no way simplistic. From computing standard deviation to negative correlation, this book covers the basics and beyond. Its laid out in such a way that it can be used as a reference book and does not need to be read cover to cover depending on your knowledge base. It has helped me tackle the task at hand with confidence and ease. I would recommend it for anyone that wants to save and hold on to their money for retirement. The Madoff scandle has only reinforced the fact that blindly trusting others to manage your assets is not a good idea. Some basic knowledge of investing and strategy is imperative to anyone wanting to take responsibility for their own assets. Asset Allocation for Dummies is a great place to start.

A great reference book whether you're new to investing or an expert. Covers not only what you'd expect from a book on asset allocation (diversification, asset mix, rebalancing, etc.) but also how to coordinate your investing with your tax planning and your long-term financial planning. The concepts and techniques are pretty advanced -- they're apparently what the pros use -- but the book explains them in a clear, simple, step-by-step, how-to way that makes them easy for anyone to implement (and understand why and how they work). It also provides a clear roadmap to where to find advice when you need it, and how not to get fleeced in the process. A thoughtful gift for graduates, newlyweds, recent retirees, or just about anyone who distrusts get-rich-quick schemes and wants to base their investing on sound fundamentals.

My credentials: I am the president of DiscoverRIA, not-for-profit organization for increasing end clients awareness of financial services reources. I wrote the Roth IRA Book), and developoed the most advanced Rebalancing software in the industry (iRebal). I have met with many of the leading advisors in the professional financial business and Jerry Miccolis of one of them. I have a great respect for his understanding of financial planning and his ability to reduce complex concepts to a level that is simple to understand and still remains accurate. This book is an illustration of his abilities and has been written in a very unbiased way without promotong one type of service or planning methodology.

So, if you are an individual considering an advisor to help you or if you wish to manage your assets yourself (I suggest you do not), this is a great book for you. It will walk you through the steps you need to take.

I particularly like the last chapter which outlines the due diligence questions you should ask of an advisor.

If there is a shorfall it is that the book does not clearly show the differences between Registered Independent Advisors and Broker Dealers. That is a very confusing area for end clients and the book could have helped more to clarify the distinctions. A further point I would have liked to seen elaborated is the risks of doing planning yourself: your emotions will invariable come in the way of sound decisions especially when the market is in turmoil. By the way, it is NOT a book for stock pickers: that is completely opposed to the wisdom of Asset Allocation based Financial Investing.

Other than those two minor additions, I consider the book to be the best resource on financial planning and Asset Allocation.

Gobind D.
CFP, Ph.D.
President FCalgorithms LLC
Chairman DiscoverRIA LLC

Jerry and Dorianne make a good team. Although the book may be intended for "dummies," it is not exactly light reading. The authors present an almost-overwhelming amount of information. Fortunately, they skip needless detail and summarize important concepts effectively. The early chapters paint a complete picture of how to invest and come out ahead. The later chapters hand you the paintbrush and put you to work.

If you can calculate means, standard deviations, and correlation coefficients - or your spreadsheet can -- and you understand the concept of "efficient frontier," then you are several steps ahead of the average "dummy" who encounters this material for the first time when he picks up this book. If the concepts are new to you, then you will find the graphics helpful and the explanations lucid.

Different asset classes have different track records under different economic conditions, More than two asset classes are highly unlikely to be winners during any single stretch of time under a particular set of conditions. Even experts can't consistently predict when winners will turn into losers (and vice versa). An investor's best chances for long-term success are to select a collection of asset classes that suit the investor's risk tolerance and time horizon, watch the accumulated balances in each asset class, and rebalance the portfolio whenever one class grows to (or shrinks to) more than a certain percentage of the total (current) value of the entire portfolio. Rebalancing means re-establishing equal dollar values in each asset class by selling assets from some classes and buying assets in another class so as to. In other words, you shift some of the gains from yesterday's winners to tomorrow's winners, and the overall winnings will grow over time.

Periodic rebalancing takes advantage of four characteristics that are apparent to anyone who becomes familiar with market behavior. First, no appreciating asset class appreciates forever. Second, a "risk-free" return will be outdone over time by inflation. Third, what goes up slowly and steadily for a long time will sometimes crash. Fourth, even when a crash seems inevitable, its exact timing is unpredictable.

Rebalancing takes some discipline, but it makes the expected return of the total investment portfolio much higher than the expected return of any single asset class, and it makes the standard deviation of the total portfolio returns over time quite low compared to any of the four volatile asset classes. With a long enough investment horizon and sufficiently volatile markets, you almost have to come out ahead.

"Asset Allocation for Dummies" will teach you about a broad range of investment classes. It will walk you through the process of determining time horizon and risk tolerance, selecting asset classes, and setting rules for rebalancing. The book breaks down a complicated process into reasonable chunks that you can work through. Do it right at the beginning, and the rest will almost take care of itself. You may spend a few weeks working through the chapters and setting up your investments according to plan, but you'll reap the rewards for many years.

The way you choose to distribute your money between different kinds of investments has more to do with your long-term success as an investor than anything else. How you choose to distribute your money is called asset allocation and that is what this book explains clearly.

Deciding on the right investment mix of stocks and bonds (say 70% stocks and 30% bonds) is much more important in the long run than picking the right stock or bond fund. This book helps you feel comfortable when coming up with your plan.

Central to asset allocation is the idea that in different years some investments do better than others. Over the long haul if you pick the right mix of stocks, bonds, real estate and other investments your have the possibility of earning more money with less risk.

This book covers the basics well and helps you avoid common mistakes. Also covered are more advanced topics such as the role that commodities and hedge funds might play in your portfolio.

I know co-author, Dorianne Perrucci, and this book is a good reflection of her talent in making the complex approachable. Dori and her co-author, Jerry Miccolis, do a nice job not only of describing how asset allocation works, but also of telling readers how to apply these concepts to their own situations.

Pay particular attention to correlation (Chapter 4) and business cycles (Chapter 15). Rebalancing (Chapter 11) may help the do-it-yourself investor avoid portfolio drift.

This is a very well written book packed with good and useful information. The book emphasizes the importaces of asset allocation and rebalancing. I would have liked a few more examples using some MS Excel functions in the book but as is it deserves to on the shelf of every serious investor.

Investors are more frightened and confused than ever. Here's a refreshing roadmap to investment sanity.

Everyone talks about the importance of getting - and keeping - the best asset allocation, but how do you do it? You'll find the answers here, clearly and logically developed.

The author takes you through all the steps: weighing risk and return, developing your investment strategy, viewing your accounts holistically, determining your asset mix, rebalancing your portfolio, coordinating your investments with your long-range financial plan, managing taxes and costs, and measuring results.

You'll also find valuable tidbits, such as how to calculate simple and compound rates of return without being a math genius. This is a book that you can read and implement now. And it will be a valuable reference source you can consult for many years.