Title: "The Affluent Investor: Financial Advice to Grow and Protect Your Wealth"
Author: Phil DeMuth
Publisher: Barron’s, 2013; 224 pages; $20.69
In life, they say, the bigger they are, the harder they fall. And in the wake of the recession, we have started to see the financial corollary of this adage, which might go something along the lines of "The more they have, the more they have to lose."
Boomers with big, nearly retirement-ready investment portfolios? They took the hardest hit, according to a recent New York Times article. So did other savers, investors and even well-paid employees who had big savings, portfolios and salaries to match.
So, while many books and resources of late have been devoted to helping the newbie investor or folks starting from scratch, I was particularly interested to see the new title from Phil DeMuth, financial adviser and longtime right-hand man to Ben Stein, which is devoted to helping people with at least $100,000 in assets make smart decisions not only about how to make money, but about how to protect and wisely steward the money they do have — the dilemma so many have faced in recent times.
"The Affluent Investor: Financial Advice to Grow and Protect Your Wealth" is that book, and it takes a light-hearted and entertaining (but serious and smart) approach to helping the affluent (people with net worth greater than $100,000, but less than $10 million) get ahead. (In fact, much of the book’s advice is targeted to people with more than $1 million in assets, but DeMuth posits that younger folks with $100,000 can put themselves on track to get into the high-net-worth category of $1 million to $10 million, as they age, and so should also read what he has to say.)
DeMuth starts out breaking down some basic statistical realities about the educational backgrounds, family and marital decisions and lifestyle/basic money management tendencies of the affluent, using them to reach some recommendations about how to live and operate in the world on a basic level if you have a high net worth and would like to stay that way.
DeMuth then moves on to provide a basic set of guidelines for making investment decisions based on both your life stage and who you are, providing a smart set of personality and financial insights for common net-worth types, be they doctors, lawyers, execs, entrepreneurs or the widow(er)s and divorced spouses of a member of one of these groups.
DeMuth moves on to discuss what economists and financial advisers alike call "the market portfolio," and explain why and how the affluent should invest passively in a diversified portfolio that reflects the market, reduces risk, and is tax- and cost-efficient.
DeMuth then provides a set of steps for thinking and walking through the process of personalizing a market portfolio to account for your own life circumstances and how to use a handful of more sophisticated strategies and a deeper understanding of behavioral economics to boost your chances of beating the market while still keeping risk at a minimum. DeMuth closes out the book by offering strategies and almost checklist-style guidelines for:
- keeping and growing your wealth during retirement;
- protecting your assets as a lifelong endeavor; and
- minimizing taxes.
Along the course of delivering a very sensible, easy-to-read, easy-to-act on lifelong plan for maintaining affluence, DeMuth urges readers not to commit what he calls the seven deadly financial sins:
- not working hard in an area where you have an edge;
- got no plan;
- gambling instead of investing (both of which he clearly defines);
- transfusing your savings to the financial services industry (which he tells readers how to avoid); and
- not staying the course in bad times.
If you fall within the category of affluent or high net worth (or you want to), reading "The Affluent Investor" will help you stay burdened with money, and make wise money management and overall life decisions, in the process.