9780137029105

This book illustrates how FOUR principles inspired by basic arithmetic can be applied to manage the most important financial decisions (money milestones) people face over their entire financial lifecycle. They are Identify the true value all of your financial resources (ADDITION). Budget for the hidden liabilities in your future (SUBTRACTION). Spend your total resources evenly over time (DIVISION). Prepare for many alternative and unexpected universes (MULTIPLICATION). This book offers a complete framework for thinking about money thatrs"s every bit as provocative as Freakonomics Drawing on the newest research into psychology and personal finance, Milevsky helps you identify thetruevalue all of your resources; budget for hidden liabilities in your future; plan to spend your total resources smoothly over time; and prepare for unexpected events that could upend even the most careful planning. Yours"ll discover why: children are short-term investment liabilities but may be long-term pension assets; winning the lottery may increase your chances of going bankrupt; and giving up control of your retirement nest egg might actually make you happier. The insights are fascinating and useful throughout your life whether yours"re deciding what to study; contemplating your first home purchase; deciding whether to keep contributing to your 401(k); or considering when and whether to retire.

Moshe A. Milevsky, Ph.D. is a tenured finance professor at the Schulich School of Business at York University (www.yorku.ca) in Toronto, Canada, and the executive director of the nonprofit IFID Centre (www.ifid.ca). He is also the president and CEO of The QWeMA Group (www.qwema.ca), a software company that develops intellectual property and numerical algorithms for the financial services industry. He also writes a monthly column for Research Magazine that is read by financial advisors and planners in North America.

Moshe is a well-known public speaker and has delivered keynote lectures and seminars in Europe, South America, the Far East, and the UK. In June 2009, he was a main platform speaker for MDRT’s annual meeting. He has consulted for global insurance companies and pension funds including the Florida State Board of Administration’s (FSBA) retirement plan. He is currently a member of a variety of corporate advisory councils. To date he has published seven books, more than 50 peer-reviewed research papers, and more than 100 personal finance articles on the topic of insurance, investments, pensions, retirement, and annuities.

Moshe received two National Magazine (Canada) awards in 2003 for his popular-press writing and received a Graham and Dodd scroll award from the CFA Institute for a 2006 research article in the Financial Analysts Journal. In the summer of 2002, he was elected a Fellow of the Fields Institute for Research in Mathematical Sciences, and in September 2008, he was given a lifetime achievement award from the Retirement Income Industry Association (RIIA). In May 2009, he was named to Investment Advisor magazine’s IA25 list of most influential people in the financial advisory business.

Moshe’s previous book Are You a Stock or a Bond? Create Your Own Pension Plan for a Secure Financial Future was published by FT Press in September 2008 and is available in fine bookstores everywhere.

Acknowledgments	p. xv
About the Author	p. xvii
Prologue: Financial Deicide	p. xix
Introduction: Human Capital: Your Greatest Asset	p. 1
Is That Glass Half-Empty or Half-Full? Valuing Human Capital	p. 3
Mark Yourself to Market	p. 6
Is This a Cynic's Value or True Worth?	p. 7
An Appreciation That Grows with Age	p. 8
The Nine Milestones	p. 9
Money Milestones over Your Lifetime	p. 10
Summary	p. 12
Is the Long-Term Value of an Education Worth the Short-Term Cost?	p. 13
Investing in a Gold Mine...Called Anastasia	p. 14
Should We Allow Human Capital Derivatives?	p. 14
Securitizing Human Capital	p. 16
Are College Graduates Truly Wealthier?	p. 18
The Best-Paying Careers?	p. 19
Minor Initial Differences Magnify over Time	p. 20
How Investing in Human Capital Pays	p. 21
Human Capital Investments over Time	p. 23
College Grads Learn to Buy Different Assets	p. 25
Could the Fortunes of College Graduates Wane?	p. 27
Does the Ivy League Pay Greater Dividends?	p. 28
Distinct Groups of Students-And "Fun Capital"	p. 31
Did Anastasia Accept the Offer?	p. 32
Summary	p. 32
What Is the Point of Saving Money Forever?	p. 35
The 25-to-25 Jackpot: What Would You Do?	p. 36
Guiding Principle: Smoothing Consumption	p. 38
How Does Income Smoothing (Long Division) Work in Practice?	p. 40
Advice That Goes Against the Grain-but Smoothes?	p. 41
We Are Not Mr. Spock in Star Trek	p. 43
Do People Who Win the Lottery Behave Rationally?	p. 44
The Perils of Not Smoothing	p. 47
The Smoothest Population of All	p. 49
Where Does All of This Leave Us?	p. 50
Summary	p. 51
How Much Debt Is Too Much and How Much Is Too Little?	p. 53
Americans Have Diverse Debts	p. 54
These Eggs Belong in One Basket	p. 55
Optimal Debt Management Strategies Across Space and Time	p. 56
Liability Silos Compared	p. 57
Bottom Line: Debt Diversification Destroys Value	p. 60
Should You Borrow from Yourself?	p. 61
The Borrowing Sweet Spot: Age 53	p. 63
Oh, and Being Slim Can Help as Well	p. 65
Debt Literacy as Distinct from General Financial Literacy	p. 66
Concluding Thoughts: Is Debt Soothing or Smoothing?	p. 67
Summary	p. 68
Are Kids Investments and Can Marriages Diversify?	p. 69
Children: Explicit Liabilities, Hidden Assets	p. 70
Inducing More Children	p. 71
Children as Pensions-And a General's Revenge	p. 73
Thwarted by Good Intentions	p. 75
Is Marriage a Safe Investment on the Balance Sheet?	p. 78
Two Plus Two Equals a Very Safe Four	p. 80
Fiscally Fatal Attractions	p. 81
Birds of a Feather May Not Flock Together	p. 83
Summary	p. 84
Government Tax Authorities: Partners, Adversaries, or Bazaar Merchants?	p. 85
How Do Taxpayers Behave if "Big Brother" Is Watching?	p. 87
Treat Your Tax Filing Like a Trip to the Bazaar	p. 88
Tax Authorities as Lifetime Partners in Your Business	p. 90
Tax Lessons from Uruguay (a Beautiful Little Country in South America)	p. 90
Another Puzzle: People Prefer Big Tax Refunds	p. 92
The After-Tax Return Matters	p. 94
Reversals of Fortune	p. 96
Bottom Line: Get Tax Savvy	p. 98
Summary	p. 99
Can You Eat Your House or Will It Ever Pay Dividends?	p. 101
Floating Debt Obligations and Sinking Values	p. 102
Back to the Holistic Balance Sheet	p. 103
My Strong Bias: Many Homeowners Should Have Rented	p. 105
Housing over Time: A Human Capital Approach	p. 107
The Missing Factor: Housing and Social Capital	p. 108
Investing in Social Capital	p. 110
Summary	p. 111
Insurance Salesmen and Warranty Peddlers: Are They Smooth Enough?	p. 113
Insurance from Babylonia to Today	p. 115
Insurance Purchases: Another Form of Smoothing	p. 116
Life Insurance as a Hedge for Your Human Capital: When Young	p. 118
Life Annuities as a Hedge for Your Financial Capital: When Old	p. 120
What and When Do People Actually Insure?	p. 122
Create Your Own Insurance Company: The "Small Risk Fund"	p. 125
Behavioral Economics in Practice	p. 126
Summary	p. 128
Portfolio Construction: What Asset Class Do You Belong To?	p. 129
What Went Wrong?	p. 131
Are You a Stock or a Bond or Something in Between?	p. 133
How Does Your Allocation Measure Up?	p. 136
Avoiding Robert's Outcome	p. 139
Human Capital Impacts Financial Capital Well Before Your First Job	p. 140
Can You Take Diversification Smoothing Too Far?	p. 143
History of Ideas: Credit, Where It's Due	p. 144
What About the Rest of Us? Back to Human Capital	p. 144
Summary	p. 145
Retirement: When Is It Time to Shutter the Well and Close the Mine?	p. 147
Why Are Pensions So Important?	p. 149
Pensions Are a Dying Breed	p. 150
Retirees with Pension Annuity Income Are Happier	p. 153
Florida's Elderly, Pension Choices, and My Brush with Bush	p. 155
Investment Plans Versus Pension Plans- What Would You Choose?	p. 156
Do Retirees Smoothly Transition into Retirement?	p. 158
Don't Count on Pennies from Heaven to Smooth Your Retirement Ride	p. 160
Is It Better to Get a Lump Sum? The Military View	p. 161
Taldng Their Lumps	p. 163
Women and Annuities	p. 165
Final Recommendations: Get a Pension, from Somewhere	p. 166
Summary	p. 167
Conclusion: Four Principles to Guide All Financial Decisions and Money Milestones	p. 169
Create a Decision-Making Process for All Money Milestones	p. 171
The Perfect Job for Me!	p. 176
References	p. 177
Index	p. 185
Table of Contents provided by Ingram. All Rights Reserved.

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Your Money Milestones : A Guide to Making the 9 Most Important Financial Decisions of Your Life

Your Money Milestones : A Guide to Making the 9 Most Important Financial Decisions of Your Life

0137029101

Summary

Author Biography

Table of Contents

Supplemental Materials