Summer Reading Book Review #1

I just finished my first book in my summer reading list, Yes, You Can Still Retire Comfortably by Ben Stein and Phil DeMuth. I loved this book. Stein and DeMuth inject enough dry humor to make what would normally be a dry reading an actually entertaining AND informative reading (quite a difficult act). One of the most interesting things they did that I had not seen in these types of popular books was their use of Monte Carlo testing of their proposed investing strategies as well as comparing their method to other methods (and pointing out where other methods might be more advantageous). The book is divided into three parts:

1. The coming crisis of the coming "baby boomer" retirement tidal wave.
2. Figuring out how much you REALLY need to save.
3. What you can do if you are behind the eight-ball.

While providing a lot of analysis and custom tailoring options the main points can be boiled down to the following:

Most people are not saving enough and most financial planning people are misusing commonly know statistics NOT to the advantage of those looking at retirement.

While sophisticated investors have some options, the best investment strategy that the relatively uninformed lazy investor is the "couch potato" portfolio: invest half of your money in a broad market index fund and half in an medium-long bond index fund.

Save as much and as long as you can into this fund.

When it comes time to withdraw in retirement, withdraw based on whether the market is overvaluing stocks. If yes, withdraw a larger amount from the stock side. If it isn't, withdraw from the bond side (their Web site provides the indicator for you).

Rebalance every five years.

Now there are a lot of details that I, with my mathematical background, absolutely loved (such as rather basing your withdrawal rate based on a combination of comfort level, probability of outliving your investment, etc). The numbers, statistics, and theories are all there but bundled in such a way that if you don't want to read them you are allowed by the authors to skip them and just hit the "What do I do", but anyone serious about retirement should make the effort to plow through the analysis to get an excellent education about what investment and retirement planning should really consider.

Great work guys! I'm definitely getting your other books!