Asset Allocation for Dummies (ISBN - 0470409630)

363 Pages·2021·5.09 MB·English

Jerry A. Miccolis,
CFA, CFP, FCAS, MAAA
Senior financial advisor and co-owner,
Brinton Eaton Wealth Advisors
Dorianne R. Perrucci
Financial author and editor

Learn to:
• Use allocation strategies that best serve
your goals

• Balance and rebalance your portfolio

• Maximize returns and minimize risk

Asset
Allocation

Making Everything Easier!™

Open the book and find:

• The top asset allocation mistakes

• How to match the right
investments with the right
accounts

• Ways to successfully manage risk

• Best practices for portfolio
rebalancing

• “What if?” investment scenarios

• Historical rates of return on ten
asset classes and subclasses

• How to project your financial
future

• Guidance for fine-tuning your
long-term allocation plan

Jerry A. Miccolis, CFA, CFP, FCAS, MAAA, is a financial advisor, widely
quoted financial author, and expert commentator who has appeared on
CBS Radio and ABC-TV. Dorianne R. Perrucci is a freelance writer who
has been published in The New York Times, Newsweek, and TheStreet.com,
and has collaborated on several investing books, including I.O.U.S.A., One
Nation, Under Stress, In Debt (Wiley, 2008).

$24.99 US / $29.99 CN / £16.99 UK

Business/Personal Finance/Investing

ISBN 978-0-470-40963-3

Go to dummies.com®

for more!

Use allocation strategies
of the pros and protect
your financial future

You don’t have to be an investment expert to allocate your
assets successfully. This plain-English guide demystifies
the process, giving you timely advice on diversifying your
investment portfolio to help insulate it against volatility.
You’ll see how to develop your personal investment
strategy, avoid costly mistakes, and rebalance to generate
extra return.

• The ABCs of asset allocation — discover how it works, why to do
it, and the level of risk you’re comfortable with

• Explore the different asset categories — from cash and bonds to
stocks, mutual funds, exchange-traded funds, and more

• Plan your investment strategy — set your portfolio constraints,
outline your financial goals, and select your asset classes

• Choose securities and accounts — select the best ones,
understand fees and expenses, and take advantage of tax breaks

• Maintain your portfolio — keep tabs on your investments,
know when to rebalance, and measure your results against
appropriate market benchmarks

• Go beyond the basics — consider alternative investments (such
as real estate and commodities), maximize after-tax results, and
work with the pros when you need help

Asset Allocation

Miccolis
Perrucci

Spine: 0.72”

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Asset Allocation

FOR
DUMmIES

‰

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by Jerry A. Miccolis, CFA®, CFP®, FCAS, MAAA
Brinton Eaton Wealth Advisors
and Dorianne R. Perrucci
Financial writer

Asset Allocation

FOR
DUMmIES

‰

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Asset Allocation For Dummies®

Published by
Wiley Publishing, Inc.
111 River St.
Hoboken, NJ 07030-5774
www.wiley.com

Copyright © 2009 by Wiley Publishing, Inc., Indianapolis, Indiana

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or
by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permit-
ted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written
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owners. Wiley Publishing, Inc., is not associated with any product or vendor mentioned in this book.

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Library of Congress Control Number: 2009925030

ISBN: 978-0-470-40963-3

Manufactured in the United States of America

10 9 8 7 6 5 4 3 2 1

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About the Authors

Jerry A. Miccolis: Jerry’s clients, colleagues, and friends were caught a
bit off-guard when, in 2003, he decided to change careers, from enterprise
risk management to personal wealth management. But, toward the end of
his 30-year stint in the actuarial and risk-management fi elds (including 25
years with the international management consulting fi rm Towers Perrin,
where he eventually led the global enterprise risk management practice),
he had already nearly achieved the two most sought-after certifi cations of
his chosen second career — Chartered Financial Analyst (CFA) and Certifi ed
Financial Planner (CFP). He’s never been happier, helping real people secure
their fi nancial future. A senior fi nancial advisor at, and co-owner of, Brinton
Eaton Wealth Advisors in Madison, New Jersey, Jerry adds his CFA and CFP
designations to his credentials as a fellow of the Casualty Actuarial Society
(FCAS) and member of the American Academy of Actuaries (MAAA). Jerry,
who is also a member of the Financial Planning Association (FPA) and the
New York Society of Security Analysts (NYSSA), holds a BS in mathematics
from Drexel University.

The coauthor of Enterprise Risk Management: Trends and Emerging Practices
(The Institute of Internal Auditors Research Foundation) and Enterprise Risk
Management: An Analytic Approach (Tillinghast-Towers Perrin), Jerry has
chaired numerous professional committees and is a widely quoted author
and speaker on the subject of strategic risk management, investment
management, and their interrelationship. Jerry has been published in profes-
sional journals (Strategy & Leadership, Operational Risk, Risk Management,
Institutional Investor, CFO Magazine, Investment Advisor, and Financial
Planning) and in the mainstream media (The New York Times, The Wall Street
Journal, The Baltimore Sun, MarketWatch, MSN Money, and Marketwire). He
has appeared as an expert commentator on CBS Radio, ABC TV, and IRMI.
com, the Web site of the International Risk Management Institute.

All of this, though, is what Jerry does between senior softball games, his real
passion. There, Jerry plays third base and shortstop and bats much lower in
the lineup than he thinks he should.

You can read more of his and his colleagues’ investment advice at www.
brintoneaton.com (click Research Corner) and about his softball addiction at
www.casact.org/newsletter/index.cfm?fa=viewart&id=5639.

Jerry A. Miccolis, CFA, CFP, FCAS, is a principal of Brinton Eaton Associates,
Inc., d/b/a Brinton Eaton Wealth Advisors, an investment adviser registered
with the United States Securities and Exchange Commission. No reader
should assume that the book content serves as the receipt of, or a substitute
for, personalized advice from Mr. Miccolis, from Brinton Eaton Associates,
Inc., or from any other investment professional. Please remember that

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different types of investments involve varying degrees of risk. Therefore, it
should not be assumed that future performance of any specifi c investment or
investment strategy (including the investments and/or investment strategies
referenced in this book) will be profi table.

Dorianne R. Perrucci: Dorianne jokes that she’s still looking for the 13¢
that caused her fi rst checking account to bounce. Dorianne, who has writ-
ten for Newsweek, The New York Times, Mediaweek, and TheStreet.com,
began reporting about personal fi nance and investing in 1998 for Jane Bryant
Quinn’s Washington Post column. Previously, she reported for a daily news-
paper, wrote a political column for a U.S. senator, and produced articles
and books for several of the country’s leading charities, including Covenant
House, the Times Square shelter for homeless and runaway youth. She cur-
rently edits and collaborates on investing books, including: The Demise of the
Dollar . . . and Why It’s Great for Your Investments, by Addison Wiggin (Wiley
Publishing); I.O.U.S.A., One Nation, Under Stress, In Debt, with Addison Wiggin
and Kate Incontrera (Wiley Publishing); The Ultimate Depression Survival
Guide, by Martin D. Weiss (Wiley Publishing); and the AARP Crash Course in
Creating Retirement Income, by Julie Jason (Sterling Publishing).

Dorianne, a graduate of Marquette University’s School of Journalism, is a
member of the American Society of Journalists and Authors and the New York
Financial Writers Association. When she isn’t busy explaining the consumer’s
next investment challenge, she continues to search for that missing 13¢.

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Dedication

To you, the average investor, who is curious enough to wonder if a For
Dummies book can really help you get superior investment results, like the
pros. Asset allocation, which begins with determining the right (and the
right-size) baskets for your investment “eggs,” isn’t exactly a piece of cake,
but we promise, if you’re determined to learn the recipe, we’ll make the pro-
cess a very satisfying one for you.

Acknowledgments

It takes a village to write a book. Okay, not original, but true — you need a
tribe of supporters to make it safely to the “effi cient frontier” of investing.

Jerry Miccolis thanks his coauthor, Dorianne, for her contagious enthusiasm
and offbeat sense of humor — and for constantly nagging him to “Keep
it accessible!” Numerous editorial suggestions from his Brinton Eaton
colleagues — Bob DiQuollo, Ben Jacoby, Jeremy Welther, Jerv Brinton, Nick
Laverghetta, Ellen Clawans, and Abby Scandlen — vastly improved the fi nal
manuscript. Special mention to Marina Goodman, who seemed to take
particular pleasure in offering blistering critiques of early drafts but also
made excellent original contributions and helped prepare many of the
exhibits and examples. They and the rest of the staff — Colleen Betzler, Dave
Hill, Eric Mancini, Doris Merrick, Adrian Fedorkiw, Kim Dibenedetto, and
Pam Trunfi o — graciously picked up the slack for Jerry at the offi ce. Most
important, Jerry thanks Marcella, his wife and muse, for her unfailing
support, encouragement, and understanding, during the nights and weekends
he devoted to this book.

Dorianne Perrucci thanks Jerry, for his patience in explaining technical
jargon and would like to ask him to explain perfect negative correlation one
more time. She thanks her agent, Marilyn Allen, and the entire amazing For
Dummies team, especially Acquisitions Editor Stacy Kennedy, who actually
wanted to publish a book on asset allocation; Elizabeth Kuball, project editor
extraordinaire; and Dummifi er Brittain Phillips, whose mysterious ability to
rework text works wonders. Dorianne is also grateful for her family and a
host of colleagues and friends for continuing to cheer her on.

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Publisher’s Acknowledgments

We’re proud of this book; please send us your comments through our Dummies online registration
form located at http://dummies.custhelp.com. For other comments, please contact our
Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax
317-572-4002.

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and Media
Development

Project Editor: Elizabeth Kuball

Acquisitions Editor: Stacy Kennedy

Copy Editor: Elizabeth Kuball

Assistant Editor: Erin Calligan Mooney

Editorial Program Coordinator: Joe Niesen

Technical Editor:
Louis J. Schwarz, QFP, CFP, RFC

Senior Editorial Manager: Jennifer Ehrlich

Editorial Supervisor and Reprint Editor:
Carmen Krikorian

Editorial Assistants: Jennette ElNaggar,
David Lutton

Cover Photos: © Yiap Lightbox/Alamy

Cartoons: Rich Tennant
(www.the5thwave.com)

Composition Services

Project Coordinator: Kristie Rees

Layout and Graphics: Carrie A. Cesavice,
Reuben W. Davis, Melissa K. Smith,
Christin Swinford

Proofreaders: Melissa Cossell,
Jessica Kramer, Broccoli Information
Management

Indexer: Potomac Indexing, LLC

Special Help: Brittain Phillips

Publishing and Editorial for Consumer Dummies

Diane Graves Steele, Vice President and Publisher, Consumer Dummies

Kristin Ferguson-Wagstaffe, Product Development Director, Consumer Dummies

Ensley Eikenburg, Associate Publisher, Travel

Kelly Regan, Editorial Director, Travel

Publishing for Technology Dummies

Andy Cummings, Vice President and Publisher, Dummies Technology/General User

Composition Services

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