The Value of Debt: How to Manage Both Sides of a Balance by Thomas J. Anderson

By Thomas J. Anderson

A New York Times bestseller and one of many Ten most sensible enterprise Books of 2013 by way of WealthManagement.com, this publication brings a brand new imaginative and prescient of the price of debt within the administration of person and kin wealth

In this groundbreaking booklet, writer Tom Anderson argues that, regardless of the reflex aversion most folk need to debt—an aversion that's vociferously preached through such a lot own finance authors—wealthy participants and households, in addition to their monetary advisors, have every little thing to achieve and not anything to lose via studying to imagine holistically approximately debt.

Anderson explains why, if strategically deployed, debt might be of large long term profit within the administration of person and kin wealth. extra importantly, he faculties you in time-tested recommendations for utilizing debt to progressively construct wealth, to generate tax-efficient retirement source of revenue, to supply a competent resource of cash in instances of main issue and fiscal setback, and more.
• Takes a "strategic debt" method of own wealth administration, emphasizing the necessity to delight in the price of "indebted strengths" and for buying the instruments had to benefit from these strengths
• Addresses tips to be certain your optimum debt ratio, or your debt "sweet spot"
• A better half site encompasses a proprietary instrument for calculating your individual optimum debt ratio, which allows you to improve a private wealth stability sheet

Offering a daring new imaginative and prescient of debt as a strategic asset within the administration of person and kin wealth, The price of Debt is a vital source for monetary advisors, filthy rich households, kinfolk workplaces, investors.

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Additional info for The Value of Debt: How to Manage Both Sides of a Balance Sheet to Maximize Wealth

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Kahneman and A. Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica 47 (1979): 263– 291. The ideas in this theory and in behavioral finance are important to understand and overlap with the ideas in the book. Combining behavioral finance with traditional finance can help an advisor gain a better understanding of individuals’ feelings toward debt, their risk reward objectives, and their optimal debt ratios. 15. The information in this chapter is to be considered in a holistic way as a part of the book and not to be considered on a stand-alone basis.

Com/article/2013/04/24/apple-debt-idUSL2N0D B1X020130424. 10. Eugene F. Brigham and Joel F. Houston, Fundamentals of Financial Management, Concise 4th (Mason: Thomson/South-Western, 2004), 465. The optimal capital structure is debated and changes throughout time. It is discussed in the following papers: A. Kraus and R. H. Litzenberger, “A State-Preference Model of Optimal Financial Leverage,” Journal of Finance, September 1973, 911–922; Murray Z. Frank and Vidhan K. Goyal, “Trade-Off and Pecking Order Theories of Debt,” February 22, 2005.

Indd 21 20-08-2013 11:53:23 22 t h e va lu e o f d e b t i n t h e m a nag e m e n t o f w e a l t h For a company, then, according to Corporate Finance (Ross, Westerfield, and Jaffe 2013), Financial distress is a term that defines the events preceding and including bankruptcy such as a violation of loan contracts. Financial distress is comprised of the legal and administrative costs of liquidation or reorganization (direct costs); and an impaired ability to do business and an incentive toward selfish strategies such as taking large risks, under-investing, and milking a property (indirect costs).

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