April 15, 2005
Finance prof and MBA spouse publish book on personal finance
WEST LAFAYETTE, Ind. A new book on personal finance by a former business school dean and his MBA spouse distinguishes itself from the shelves of books on investing by defining itself as both a wake-up call and workbook for families interested in taking charge of their financial lives.
"Strategies in Personal Finance"(Purdue University Press, $49.95) is a joint effort of Keith V. and Jane A. Smith. Keith Smith is former dean of the Krannert School of Management and a professor emeritus of finance. Jane Smith is a Krannert School MBA graduate and principal of a small-business consulting service.
"Strategies in Personal Finance," subtitled "Basic Investment Principles for Today and Tomorrow," is appropriate for a number of audiences, the authors said. While primarily intended as an undergraduate textbook in financial planning and investment management, the book was written with other audiences in mind, including MBA students, and individual chapters on saving, investing, taxes and real estate, for example lend themselves to financial planning seminars.
Keith Smith said individuals and families also could make use of the book independently to raise their financial I.Q.
"We believe many families have little interest or skills in 'how to manage' their savings and investments toward achieving explicit goals," Keith Smith said. "In our book, we offer advice on management techniques that can prove helpful, on key investment opportunities to be considered and on practical decisions that families should address."
Jane Smith said that for families, the book is a beginning and not an end.
"We believe our book reads easily, but a family must work hard to understand and implement our content," she said.
The book, which has 19 chapters, is divided into three parts: management tools, management opportunities and management decisions. Chapter topics include measures of risk and return, modern portfolio theory, stocks, bonds, real estate, asset allocation and estate planning.
The Smiths divide adult family financial life into three categories:
Ages 20-40, active employment, child raising and the beginning of savings for retirement.
Ages 40-60, maximum income, temporarily high college expenses for children and more serious thinking about retirement.
Ages 60-80, retirement or preparation for retirement.
Throughout the book, the Smiths present the prototypical family financial situation of the Coopers, a couple in their 50s who are preparing for retirement. At the end of each chapter are questions about the Coopers' financial decisions that personalize the content. For example, the chapter on mutual funds ends with questions about what type of investment company is appropriate for the Coopers' financial situation and how important they should consider "loads," or sales charges, on funds.
Each chapter includes a relevant "Getting Going" column by the Wall Street Journal's Jonathan Clements.
Also sprinkled throughout the book are quotes on financial matters from the wise, witty and foolish. In 1929, for example, Yale University economist Irving Fisher said, "Stocks have reached what looks like a permanently high plateau." And, from Mark Twain: "I am opposed to millionaires, but it would be dangerous to offer me the position."
At the end of the book is a glossary of hundreds of terms for the fledgling portfolio manager. It begins with the "12b-1 fee," the yearly charge for advertising and marketing mutual fund companies charge their customers, to "yield-to-maturity," the measure of the total return on a bond from the time it is bought until it matures.
Writer: Mike Lillich, (765) 494-2077, firstname.lastname@example.org
Sources: Keith V. and Jane A. Smith, (765) 494-8251, email@example.com
Tom Bacher, Purdue University Press, (765) 494-8251, firstname.lastname@example.org
Purdue News Service: (765) 494-2096; email@example.com
Note to Journalists: Review copies are available from Tom Bacher, Purdue University Press, (765) 494-8251, firstname.lastname@example.org.
A publication-quality photo is available at http://ftp.purdue.edu/pub/uns/+2005/smithbook.jpg
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