Wealth Management

Summary

This book is intended to empower individuals with practical knowledge to manage their financial wealth from their first job until retirement and beyond.

No finance background is needed, but some basic understanding is expected (like the sense to pay off the credit card balance every month) and a prior finance course is helpful.  While there is some finance theory and math, readers can skip those parts with limited loss of the content.

The book contains three main themes:

1. Suitable investments

Possible investment choices include stocks, bonds, real estate, funds, and more complicated financial instruments. The book offers some basic asset allocations that are reasonable for individuals in different life stages. But it also explains market efficiency and how investment returns (and return volatility) work across both time and investments, so readers learn why these investment choices are reasonable.

2. Tax strategies

Taxes can deplete substantial investment value, especially for individuals who are oblivious to the loopholes and flexibility in the tax code. The book explains numerous strategies for individual investors to reduce their tax burden, including the use of tax-favored investment accounts, opportunistic trading (like “loss harvesting”), when to use ETFs vs mutual funds, and gifting to bypass estate taxes.

3. Pitfalls

The world of wealth management is filled with pitfalls. Several stem from investors’ ignorance or irrational behavior. Others are concocted by financial institutions to fleece individual investors. The book points out both types so that readers can learn to avoid them.

The book also presents plenty of material beyond these main themes, such as:

  • When should individuals purchase insurance, and what type of insurance is reasonable?
  • When should a mortgage be refinanced?
  • How much can retirees safely withdraw from retirement accounts without depleting them? (This also helps answer how much individuals need to save for retirement.)
  • How can individuals avoid costly probate court for the estate?

So read the book, follow the recommendations, and you can remain calm despite great volatility in your life and the stock market.