The winner of the book Killing Sacred Cows is Jane’s Friend.  Please contact me at livingalmost at gmail dot com!  I hope to hear back from you.  But onto the book review.  Probably the last book review of the year.  This time it’s Investing in an uncertain economy for dummies by Sheryl Garrett.

Can we live in a more uncertain economy? There are seven parts to this book and I’m going to summarize them. I feel this book is a bit of a rehashing from the book investing for dummies which I previously reviewed.  But this is a free book giveaway so what the heck right?  Leave a comment for a chance to win and I’ll draw next Wednesday 12/10/08 night 10 pm.

Part I: Laying a Solid Foundation

This part talks about your income and yourself.  This part focuses on securing your job, your income, your assets.  It talks about getting medical insurance, disability insurance, long term care insurance, and life insurnace.  Basically protecting yourself and your dependent against anything which could potentially harm your future.  Later strategies include building a solid financial plan which includes paying off debt, improving your credit score, setting financial goals, and not letting yourself sabotage your plans because of fear.  Valid points all.

Personally I think that now more than ever it’s important to get your financial house in order.  In times when job losses are mounting, it’s probably a great time to focus on keeping your job and lowering your fixed expenses.

Part II: Using Investment Vehicles and Accounts throughout the Economic Cycle

This part focuses on safer investment strategies. It starts out talking about holding cash equivalents or bonds.  Then it omves on to mutual funds, target date mutual funds and ETFs.  One area I had issue with was hedging your bets with a variable annuity. I think it’s a bad idea for 99% of people.  The fees are OUTRAGEOUS and not worth it.  Sure it sounds good to have a monthly payout every month or annually, but at what price tag?  The fees will eat you alive.

This part wraps up with looking at investing in individual stocks, bonds, and seperately managed accounts.  Another bad idea.  Basically you are paying someone to manage your money, but I believe this cedes control and you allow yourself to put enormous trust in someone else.  If they fail you can try to blame them but really, who else is to blame but yourself?  Finally this part wraps up with heding your bets with options, shorting stocks, and trading on margain.  Again a terrible idea. Between options, shorting stocks, and trading on margain, a person can easily lose their shirts in a blink of an eye.  I think of myself as a reasonably savvy investor and I don’t even have the nerve to buy options or short stocks.

Finally the part wraps up with maximize your retirement savings accounts.  Take advanatage of 401ks, IRAs, and self-employed retirement accounts. I like the summary of the accounts.

Part III: Demystifying Risk: Accumulating and Protecting Wealth

This part focuses on proper asset allocation. It explains how to build a diversified portfolio and rebalance your investments.  Something essential to minimizing risks in the long term.  It even gives examples of an aggressive, moderate, and conservative portfolio.  I particularly liked the part of investing in a bond portfolio which I haven’t had much experience or background in.

Part IV: Investing for Accumulators

This parts talks about how to save for long term and large expenses.  Things such as retirement, college, emergencies, etc.  It gives strategies specific for investors who are novices, intermediates, and experienced investors.  This part also outlines how to determine how much money you’ll need in retirement and gives a chapter dedicated to boost morale and encourage saving in a bad economy.

Part V: Heading into Retirement

This part focuses on people nearing or at retirement age. It talks about what happens when you’ve planned to retire but a bad market has put a crimp on it.  Consider working part-time to prevent drawing down of your assets. Also it talks about long term insurance and why you should buy some. It also talks about potentially selling your home and taking out a reverse mortgage.  I think reverse mortgages are not as bad as they seem.  Mostly because people who use them are people who hate the thought of moving out of their homes and are super stubborn.  They haven’t saved adequately to survive and have little assets except their home.  Thus I feel they are making a conscious decision to stay put instead of selling.

This part also talks about asset allocation during retirement. It gives you a sample portfolio and gives tips on how to minimize risk in your portfolio.  It talks about keeping 1 year of expenses in your bank account, then 2 years in a cash reserve fund, and the rest in an investment portfolio.  Then each year replenishing and assessing how much cash on hand you’ll need.

Part VI:Living on your Investment Earnings and Drawing Down your Assets

This part starts out with social security and how to run the numbers to determine when you should start drawing on SS.  Apparently the longer you think you’ll live, the longer you should wait to draw on social security.  I am guessing by the time I hit SS age, it will not be available for people like me.  Responsible savers.

This part also talks about wisely drawing on your taxable, partially taxable, and non-taxable accounts carefully.  Right now careful tax planning is essential to minimize your tax crunch.  Finally this part wraps up with what would be an appropriate asset allocation during retirement.  It’s not a great idea to be 100% in bonds or cash equivalents, or else you run the risk of losing purchasing power according to inflation.  Also it talks about leaving money to your heirs.  Should you?  And how to do it.

Part VII:Parts of Tens

All dummies books wraps up with the parts of tens chapter.  This is just a wrap of a couple of top ten list. Ten tips to minimize risk.  And ten tips for building a solid financial foundation.

1. Establish adequate cash reserves
2. Invest in your ability to earn money
3. Give yourself credit
4. Insure your income
5. Provide for healthcare expenses
6. Cover your assets
7. Diversify your investment portfolio
8. Monitor and rebalance
9. Plan for certainties in life
10. Get help

Hope you liked this brief wrap up.  Leave a comment for a chance to win!