Huston55
Thinks s/he gets paid by the post
This article A closer look at lifecycle investing - CBS News contains a good synopsis of Bernstein's new eBook, "The Ages of the Investor."
I purchased it on Amazon (it's really a booklet, and inexpensive), and it was a good read. Some key points worth mentioning:
1. The "total capital" model graphic (below) is a great way to view one's financial life when considering AA and risk.
http://i.i.com.com/cnwk.1d/i/tim/2012/06/26/Human_Capital_610x485.jpg
2. The differentiation btwn investing a lump sum and DCA, and associated risks was very enlightening.
3. Bernstein subscribes to the two buckets (or two income streams) investing/allocation approach; one low/no risk for essential expenses (he calls it the Liability Matching Portfolio), and one with more risk for discretionary expenses (he calls it the Risk Portfolio).
4. He subscribes to delaying SS until age 70.
5. Account for your mortgage as a 'negative bond' when calculating AA. This was a new concept to me.
6. There is ample discussion about sequence of return risks, and the sheer randomness of who wins versus who loses.
7. The discussion on sequence of returns risks leads to perhaps the most interesting assertion: once you've accumulated 20-25 times annual expenses, you've won and should immediately sock it away into a low/no risk 'Liability Matching Portfolio' to cover essential expenses.
8. My only complaint about the booklet is that the discussion of the "middle age" of investing, for which there's a big build-up, was disappointingly short and thin. (NOTE: Mr. Bernstein-if you read this [or if Wade Pfau does and passes it on to you], I'd sure like to see a second edition with that section expanded.)
I purchased it on Amazon (it's really a booklet, and inexpensive), and it was a good read. Some key points worth mentioning:
1. The "total capital" model graphic (below) is a great way to view one's financial life when considering AA and risk.
http://i.i.com.com/cnwk.1d/i/tim/2012/06/26/Human_Capital_610x485.jpg
2. The differentiation btwn investing a lump sum and DCA, and associated risks was very enlightening.
3. Bernstein subscribes to the two buckets (or two income streams) investing/allocation approach; one low/no risk for essential expenses (he calls it the Liability Matching Portfolio), and one with more risk for discretionary expenses (he calls it the Risk Portfolio).
4. He subscribes to delaying SS until age 70.
5. Account for your mortgage as a 'negative bond' when calculating AA. This was a new concept to me.
6. There is ample discussion about sequence of return risks, and the sheer randomness of who wins versus who loses.
7. The discussion on sequence of returns risks leads to perhaps the most interesting assertion: once you've accumulated 20-25 times annual expenses, you've won and should immediately sock it away into a low/no risk 'Liability Matching Portfolio' to cover essential expenses.
8. My only complaint about the booklet is that the discussion of the "middle age" of investing, for which there's a big build-up, was disappointingly short and thin. (NOTE: Mr. Bernstein-if you read this [or if Wade Pfau does and passes it on to you], I'd sure like to see a second edition with that section expanded.)