Asset Dedication: How to Grow Wealthy with the Next Generation of Asset Allocation

By J. Brent Burns, Stephen J. Huxley, J Burns

Book Overview

The first book to close theperilous gaps in--andenhance the performanceof--asset allocation

Asset allocation is one of today's bestknowninvestment approaches. Problem is, its major precept--that a magic-number, fixed-percentage asset mix will providesuperior results for investors who have dramaticallydifferent goals and needs--is scientificallyunproven and fundamentally flawed.

Asset Dedication updates the asset allocationmodel, outlining a seven-step processdesigned to more effectively meet the realneeds of real investors. Showing investorshow to design low-risk portfolios that moreaccurately and successfully dedicate assets, this breakthrough book helps investors fillin the gaps inherent to asset allocation bydemonstrating:

Techniques for ascertaining the bestasset mix by determining individualneeds and goalsHow asset dedication providessuperior protection against inflationand market riskInvesting strategies for the threeinvestment life phases--accumulation, distribution, and transfer

• Format: Hardcover
• Language: English
• ISBN: 0071434828
• ISBN13: 9780071434829
• Release Date: August 2004
• Publisher: McGraw-Hill Companies
• Length: 288 Pages
• Weight: 1.42 lbs.
• Dimensions: 1.1" x 6.4" x 9.3"

Customer Reviews

A simple but profound concept

I have begun using the Asset Dedication principles with my clients. It is easy for uneducated investors to understand the concepts. It provides for them the guareenteed security (using Treasury Bonds) that their income is provided for years ahead. The Asset Dedication website guides me in selecting an efficient bond ladder portfolio for each client's needs. I look forward to using the "rolling" bond ladder in years ahead when interest rates are hopefully higher to create an even more efficient portfolio. Client used to leave an appointment "hoping" that their selection of Bonds vs. Stocks proportions was appropriate. Now they walk away saying that they have a certain number of years of income set aside and are therefore comfortable with the volatility of the growth portion of their portfolios. They are comfortable because we have "bought time" which is an essential ingredient to growth.

A Must Read for Financial Success and Independence

Asset Dedication strikes a new note in personal financial planning. It makes sense that many brokers try to keep financial planning murky so that uninformed investors will buy their sales pitch and brokers continue to profit from the commissions. No doubt it will raise the hackles of many brokers who rely on investor ignorance to earn their living, and those with a vested interest in the status quo will no doubt take every opportunity to discredit the book. To the public, I urge you to read this book and learn it for yourself before solely relying on "professional's" advice. Based on the principle of dedicated portfolios, which institutions have used for years, asset dedication provides a rationale for a specific allocation of funds to stocks, bonds and cash based on their time horizon. Enough bonds are purchased to provide a secure income stream over the horizon. For anyone who bothers to read past the first 30 pages, they will find that although a fixed horizon of, say, ten years, is one option, investors would likely be more comfortable with "rolling" horizons. In a rolling horizon plan, they buy a new bond at the end of each year (or so) to extend the stream of secured income another year (or so) and keep the horizon at a constant ten years. Even more compelling is the fact that when compared to the stale asset allocation formulas, the dedication strategy ends up beating portfolios with 70 percent or less in stocks most of the majority of time (back to 1926). The chapters on the "critical path" are extremely informative. They explain how a person can monitor their portfolio to make sure it is on track to meet their goals without getting worried about market volatility. The fresh ideas and empirical evidence based on research in this book set it apart from the hundreds of tired asset allocation books that add little to what is already known. This book breaks new ground and may be only the first in a long line of new studies on asset dedication. It deserves its five star rating.

One Of The Best!!

I highly recommend this book! This is one of the top three most thought provoking personal investment books along with Malkiel's Random Walk Down Wall Street and Berstein's Intelligent Asset Allocator. Having spent more time than I care to admit reading too many investment books that neither deliver on their titles' expectations nor present any real new thinking, I believe this book is a breath of fresh air in the investing world. Authors Huxley and Burns cast aside the ambiguity inherent in Asset Allocation Theory and replace it with a practical set of concepts on personal investing. Asset Dedication offers a guide on how to explicitly dedicate asset classes (cash, bonds and stocks) for particular purposes based on each investor's goals. By following the concepts presented, the personal investor can build a solid financial bridge into retirement without giving away their hard-earned savings through too-frequent trading or relying on the sometimes-shady world of annuities. The ideas are straightforward and simple, and the material provides a breakthrough concept for the mainstream investment community. Huxley and Burns are offering us a glimpse into the near-future of personal investing. You will not be disappointed!

Asset Dedication - A Must Read

Asset Dedication by Dr. Stephen J. Huxley is a must read for anyone contemplating retirement and for those who must manage money during retirement years. This book is written in a style that is easy to understand and grasp, and does not assume that the reader be a major in economics. The book is written in a clear lucid style and provides a very helpful education. What is novel about the book is that it shows for the first time, that it is possible to invest retirement savings in a manner that they meet the unique needs of each retirement situation. In other words, the books does not blindly advocate an asset mix as those found commonly on almost all mutual fund sites. The books advocates setting aside the appropriate mix of investments in high quality Bonds, while at the same time providing exposure to Index Stock Funds. But, there is no set magic ratio like 20/80 or 40/60 for Bonds/Stocks. Instead the book advocates and shows how you can set aside just enough money for income generation while at the same time gaining exposure to the stock market in increments of 3-10 years. The basic idea is to generate income for living expenses while at the same time gaining exposure to the stock market for adequate length of time. The book does not rely on just opinions. There is plenty of hard data and analysis to back up its premises. The calculations provided in the book can also be carried out on the Internet Site for those who would like to play out different scenarios of accumulated savings and interest rates. This book is a must read for anyone seriously contemplating retirement or anyone who is actively managing ones accumulated savings during retirement years. It provides a different working plan and perspective and one that should be reviewed. This book is a must read !

The Anti-Asset Allocation Book - Fixed Formulas Are Out!

If you have ever wondered exactly how much or how little science is used in determining the asset allocation formulas that your broker recommends, this book should be revealing. We, the authors, began to get suspicious about the wide spread use of the strategy when different brokers recommended different allocation formulas for the same person. If you went to three different optometrists, you would not expect to get three different prescriptions for your glasses. One of the hallmarks of science is replication of results under identical circumstances. So we read the original academic papers that popularized asset allocation, reviewed its many critics, and used historical comparisons to test asset dedication against asset allocation, with its fixed-formula, rebalancing approach. Asset dedication is an investment strategy that has been used for years by high-end financial professionals who must manage cash flow demands, the same problem retired people face. Lo and behold, the asset dedication strategy beat all asset allocation strategies with less than 80 percent stocks in the majority of decades over a variety of time periods from 2003 back to 1990, 1976, 1947, and 1926 using only US Treasury bonds and index funds. Asset dedication is also a low cost, passive strategy that has no "magic formulas." No wonder the pros who have to deal with cash flows prefer it. Asset dedication is to asset allocation what passive index funds are to active mutual funds - cheaper, easier, and better. Its superior performance based on our statistical research compelled us to report the results. That is why we wrote this book. The book describes in detail how asset dedication is designed to deal directly with the investment situation that retired people or those nearing retirement face. It will produce identical recommendations for identical circumstances and creates a designer portfolio customized to each investor's specific individual needs rather than using a one-size-fits-all "model portfolio" approach. The book also introduces the "critical path" concept for retirement planning by younger people and is supported by an online web site (www.assetdedication.com). Professional financial planners are now beginning to look to asset dedication as either the next generation of asset allocation or a whole new paradigm in personal investment strategy. It works. The evidence is in the book. See for yourself.