Given the recent turbulence in the market, I need something to calm my nerves, so I picked up this book. When stress increases, I don't have the patience to read what I should not do, I concentrate on what I should do, which is the last half of the book. Turning to the section, Getting It Right, I will recap what the author, Peter Mallouk, listed as his "rules" and "steps".
Rule # 1: Have a Clearly Defined Plan. Step 1. Understand where you are financially when beginning the planning process. Step 2, have a goal, which includes your age, the number of years to achieve your goal, and the financial outcome of the goal. Step 3, "Run a projection showing how on track you are for that goal" (p. 136). Step 4, Given the outcome of the projection, determine what changes you need to make to objectively meet the goal. Step 5, Structure your finances--portfolio and other assets--to meet the goal. Just like any multi-dimensional concern, you might have many portfolios--and educational portfolio, a business portfolio, a real estate portfolio, etc.
Rule # 2. Mallouk recommends that investors "avoid asset classes that diminish results" (p. 137), such as cash and gold.
Rule # 3. Mallouk thinks that stocks and bond establish the foundation of well devised portfolio.
Bonds underperform stocks but stocks are volatile and any gains might not conform to your needs.
Rule # 4. Think Globally
Rule #5. Indexing works.
Rule #6. "Don't Blow out your existing Holdings" (p. 147)
Rule #7. "Asset Allocation Matters" (p. 149).
Rule #8. Align asset allocation to you needs.
Rule #9. The rebalancing imperative.
Rule #10. Periodically, review your plan and avoid the noise around you.
In addition, Mallouk has an ultimate rule, enjoy your money while you can or your beneficiaries will enjoy it for you.
skip to main |
skip to sidebar
An instrument that transmits the motion of a piston, in this case, in a financial engine or pump
