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Investing for a Lifetime: Managing Wealth for the "New Normal"

ISBN: 978-1-118-90094-9
272 pages
June 2014
Investing for a Lifetime: Managing Wealth for the "New Normal" (1118900944) cover image

Investing for a Lifetime is designed to make saving and investing understandable to the investor. Wharton Professor Richard C. Marston, 2014 recipient of the Investment Management Consultants Association’s  prestigious Matthew R. McArthur Award,  guides an investor through the main investment decisions throughout a lifetime. 

Investing for a Lifetime shows:

  • how younger investors can set savings goals
  • how both younger and older investors can choose investment portfolios to achieve these goals
  • how investors can sustain spending once reaching retirement. 

Younger and older investors alike should understand savings goals that will provide enough income to sustain spending in retirement.   They should devise rates of saving that allow them to reach their goals by the time of retirement.  Though retirement is often the main goal of investing, it’s not the only one.  Marston discusses how funding a child’s education or saving for a down payment for a home affects overall saving.

Sensible investing is also necessary for savings goals to be realized.  Investing need not be complicated, but Marston explains that a diversified portfolio should include a mix of different types of U.S. stocks, foreign stocks, real estate as well as bonds. He describes each of these asset classes and shows how they fit in an investor’s portfolio.  He shows how investors can monitor the performance of their portfolios by establishing benchmarks for each asset class to judge how well their investments are doing.  

He focuses particular attention on those investors nearing retirement. In today’s low interest rate environment, he discusses whether it is possible to fund retirement from interest and dividends alone. He shows how savings combined with Social Security can fund retirement spending. And he asks how the “New Normal” of lower returns might force investors to save more than in past decades, and to spend less in retirement than in the past. 

Investing for a Lifetime is for investors who want to understand more about the savings and investment process, particularly those who worry about whether their retirement savings will last a lifetime.

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Preface xi

Acknowledgments xv

PART ONE Saving and Investing 1

CHAPTER 1 Introduction: Investing for a Lifetime 3

CHAPTER 2 The Building Blocks of a Portfolio: Bonds and Stocks 11

CHAPTER 3 Long Swings in Returns: Are We in a “New Normal?” 23

CHAPTER 4 A Savings Goal for Retirement 37

CHAPTER 5 What Rate of Savings? 49

CHAPTER 6 Savings and Taxes 61

PART TWO Investment Choices 73

CHAPTER 7 Investing in U.S. Stocks 75

CHAPTER 8 Foreign Stock Markets: Industrial Countries of Europe and the Pacifi c 89

CHAPTER 9 Emerging Markets 101

CHAPTER 10 Investing in Bonds: The Basics 115

CHAPTER 11 Investing in Bonds: The Wider Bond Market 129

CHAPTER 12 Investing in Real Estate: REITs 145

CHAPTER 13 The Home as an Investment 157

PART THREE Wealth Management 169

CHAPTER 14 Choosing a Portfolio: Fitting the Pieces Together 171

CHAPTER 15 Best Practices for Investing 187

CHAPTER 16 Investment Income for Retirement 199

CHAPTER 17 Spending in Retirement 209

CHAPTER 18 Retirement: Putting Together a Plan 223

CHAPTER 19 The “New Normal” and Retirement 239

About the Author 249

About the Companion Website 251

Index 253

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RICHARD C. MARSTON is the James R.F. Guy Professor of Finance at the Wharton School of the University of Pennsylvania. A graduate of Yale College and MIT, where he received his PhD, Marston was also a Rhodes Scholar at Oxford University. He has taught asset allocation for over twenty years in the CIMA Program sponsored by the Investment Management Consultants Association. In 2014 he received IMCA's Matthew McArthur Award for outstanding contributions to investment management. Since 1999, he has been Academic Director of the Private Wealth Management Program, a week-long program for ultra-high net worth investors. Marston has lectured on investments throughout the United States and in over a dozen foreign countries. He is the author of numerous articles and books, including his most recent book, Portfolio Design (Wiley, 2011).

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June 26, 2014
Managing Wealth for the "New Normal"

After a decade when the stock market fell precipitously not once, but twice, investors are trying to make sense of their investing future.  Are the old rules no longer valid in an investment world with so much instability?  Is there a “New Normal” ahead with even lower stock returns and with interest rates stuck at their current levels?  In this new investing environment, how does an investor know whether their savings are on track to enable them to maintain their lifestyle when they retire?   In his new book, Investing for a Lifetime: Managing Wealth for the "New Normal,” Richard C. Marston addresses all of these questions and more.

Investing for a Lifetime is designed to make saving and investing understandable to the investor.  Written as a guide for the main investment decisions throughout a lifetime, the book is for investors who want to understand more about the savings and investment process, particularly those who worry about whether their retirement savings will last a lifetime.

Topics include:

  • How younger investors can set savings goals
  • How both younger and older investors can choose investment portfolios to achieve these goals
  • How investors can sustain spending once reaching retirement. 

Younger and older investors alike should understand savings goals that will provide enough income to sustain spending in retirement. Marston explains why they should devise rates of saving that allow them to reach their goals by the time of retirement.  Though retirement is often the main goal of investing, it’s not the only one.  Marston also discusses how funding a child’s education or saving for a down payment for a home affects overall saving.

Sensible investing is also necessary for savings goals to be realized.  Investing need not be complicated, and Marston explains that a diversified portfolio should include a mix of different types of U.S. stocks, foreign stocks, real estate as well as bonds. He describes each of these asset classes and shows how they fit in an investor’s portfolio and shows how investors can monitor the performance of their portfolios by establishing benchmarks for each asset class to judge how well their investments are doing.  

Marston also focuses particular attention on those investors nearing retirement.  In today’s low interest rate environment, he discusses whether it is possible to fund retirement from interest and dividends alone.  He shows how savings combined with Social Security can fund retirement spending.  He asks how the “New Normal” of lower returns might force investors to save more than in past decades, and to spend less in retirement than in the past. 

See More
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