The Pension Strategy: The Ultimate Guide to Personal Investing

Studies show that 90% of institutional investors, such as pension funds, reach their investment goals. However, only 11% of individual investors achieve their goals. Over the past twenty years we have witnessed both the greatest bull market of all time and one of the most devastating crashes in history. During this period, pension funds posted returns of more than double those realized by individual investors. At the same time, the institutional pensions were exposed to less than half of the risk and volatility that individual investors were forced to endure. Using a simple and disciplined process, The Pension Strategy teaches how individual investors can experience the same type of success as their institutional counterparts. The Pension Strategy is built upon the work of Nobel Prize winners William F. Sharpe and Harry M. Markowitz. It details in simple language how average investors can harness the techniques used by large pension plans, such as modern portfolio theory, dynamic asset allocation, and diversification. The Pension Strategy will: - show you how to dramatically reduce the risk in your investment portfolio. - teach you how to structure your investment portfolio and 401Ks to target the maximum possible return with the level of safety you require. - explain the secrets of the most successful pension funds, such as Dynamic Asset Allocation, Absolute Returns, the Capital Market Line, and Modern Portfolio Theory. - reveal how you can build your own Optimal Portfolio. Pension funds and institutional investors have been utilizing this portfolio for decades in order to minimize risk while maximizing their returns. - demonstrate how working with a professional investment advisor can save you both time and money, so that you can enjoy life free from financial worry. TABLE OF CONTENTS......Page 8 CHAPTER ONE: My Quest for a Solution......Page 12 CHAPTER Two: What Is a Pension Plan?......Page 20 CHAPTER THREE: Modern Portfolio Theory......Page 28 The Efficient Frontier......Page 34 A Note About Possibilities......Page 37 CHAPTER FOUR: Risk......Page 40 Currency Risk......Page 44 Interest Rate Risk......Page 46 Inflation Risk......Page 47 Manager (Specific) Risk......Page 49 Market (Systematic) Risk......Page 50 Measuring and Eliminating Risk......Page 51 How Do the Great Pension Plans Measure Risk?......Page 52 CHAPTER FIVE: Diversification......Page 60 CHAPTER SIX: Asset Allocation......Page 72 Cash and Asset Allocation......Page 79 Asset Allocation and Fixed-Income......Page 80 The Owner and the Loaner......Page 85 Government Bonds......Page 88 Certificates of Deposit......Page 89 Corporate Bonds......Page 91 Preferred Shares......Page 92 Foreign Bonds......Page 94 Asset Allocation and Equities......Page 95 Inflation-Proofing Equities......Page 98 Why Do Equities Work?......Page 103 The Real Value of Companies......Page 104 Asset Allocation and Real Estate......Page 108 Absolute Return Investments and Asset Allocation......Page 112 CHAPTER SEVEN: What Does the Ideal Pension Plan Look Like?......Page 122 Adjusting Asset Allocation to Your Risk Tolerance (Comfort Level)......Page 141 CHAPTER EIGHT: Portfolio Rebalancing: The Art of Dynamic Asset Allocation......Page 146 CHAPTER NINE: Bringing Professional Help to Your Retirement Plan......Page 156 Working with an Investment Advisor......Page 164 CHAPTER TEN: Getting Started......Page 170 Appendix: A Note on Standard Deviation......Page 180 C......Page 183 E......Page 184 I......Page 185 P......Page 186 R......Page 187 Y......Page 188 E......Page 189 O......Page 190 T......Page 191 Y......Page 192 The author shows readers how to invest for retirement with less risk, building on the investment strategies of two Nobel Prize-winning economists to show small investors how to tap into the success of much larger investors. Original.