Million Dollar Journey

Yet another book review and giveaway.  This time, we got contacted by the publisher of the book When Markets Collide: Investment Strategies for the Age of Global Economic Change by Mohamed A. El-Erian.

Who is Mohamed A. El-Erian?

According to the back of the book, he has very high credentials:

Mohamed A. El-Erian is co-CEO and co-CIO of PIMCO, one of the largest investment management companies in the world. He formerly served as president and CEO of Harvard Management Company, the firm that manages the university’s $35 billion endowment. He spent 15 years at the International Money Fund, working on policy, capital market, and multilateral economics issues. El-Erian has been featured by Bloomberg, Forbes, Financial Times, Latin Finance, CNBC, The New York Times, and The Wall Street Journal. In 2004, Fortune named him a member of its eight-person “Mutual Fund Dream Team.”

What is this book about?

In “When Markets Collide”, Mohamed El-Erian writes for 3 audiences, individual investors, economists and policy makers.  With that, he explains how to to distinguish between market noise and market signals, gives his perspective on the big picture of global markets and suggestions for changes to global market economic policies.

Here is a snippet from McGraw-Hill:

The world economy is in the midst of a series of hand-offs. Global growth is now being heavily influenced by nations that previously had little or no systemic influence. Former debtor nations are building unforeseen wealth and, thus, enjoying unprecedented influence and facing unusual challenges. And new derivative products have changed the behavior of many market segments and players. Yet, despite all these changes, the system’s infrastructure is yet to be upgraded to reflect the realities of today’s and tomorrow’s world. El-Erian investigates the underlying drivers of global change to shed light on how you should:

* Think about the new opportunities and risks
* Construct an appropriately diversified and internationalized portfolio
* Protect your portfolio against new sources of systemic risk
* Best think about the impact of central banks and financial policies around the world

Offering up predictions of future developments, El-Erian directs his focus to help you capitalize on the new financial landscape, while limiting exposure to new risk configurations.

My Thoughts

Although the credentials that Mr. El-Erian carries makes this book automatically interesting for me, at times, the book was a bit dry as it seemed to ramble on a little bit.  As a simple minded individual, I enjoy books with clear headings and clearly indicated main points which this book lacked.

Also note again that the book seemed to be written for varying audiences, with only a smaller portion of the book directed toward individual investors.

Want a Free Copy?

• Simply leave a comment and you’ll automatically be entered in the draw for a free copy.
• Please only 1 comment entry / person (please enter a valid email address).
• Only those with a North American mailing address may enter (publisher rules, sorry).
• Contest will end Friday 5pm EST Oct 10, 2008 and the winner announced shortly afterwards!

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I excitedly opened MoneySense magazine this month and came by an enlightening article about divorce.  As the wedding vows state, marriage is forever.  This is true in an ideal world, but sadly in the real world (North America), divorce happens in over 50% marriages.

As stated in the title, divorce is a wealth killer.  Here in Canada, divorce typically results in splitting the assets 50/50, but there are some special circumstances.  There is also the no-fault rule which states that it doesn’t matter what the “reason” is for divorce, the assets will be split accordingly.

Generally speaking, assets will be split down the middle, but items like houses and child support payments can be the sticking points.  For example, if a spouse stays at home to run the household, while the other spouse is the main breadwinner, the stay at home spouse may be entitled to support payments.

Are there assets that can be held separate during a divorce?  Unfortunately not many unless there was a pre-nup signed (see below).  Here are a couple of assets that can be held separate:

1. Corporate assets can be held separate from divorce proceedings if only one spouse is the shareholder.  However, again, if the court determines that the non shareholder spouse has “contributed” to the business, then he/she will be entitled compensation.  Thanks to The Money Grubbing Lawyer for this tid bit of information.
2. Inheritance can be held separate if the money is not used for family purposes.  Once the money is intertwined with the family finances, like buying a family cottage, that’s when it can get tangly.  More on this below.

If divorce is the inevitable path:

• Seek a lawyer and get advice - This is a key step because a lawyer will give you initial advice on how to proceed according to the laws of your province.
• Arbitration instead of court - Discuss with your spouse the advantages of going through arbitration instead of going to court.  The cost difference is dramatic.  According to the Moneysense article, arbitration can cost around $15,000 where going to court can cost up to 10 times more.
• Keep inheritances separate - Inheritance received by a spouse is among the few assets that can be separated in the case of the divorce.  That is depending on if the inheritance money was used for the for family or not.  Lesson here?  If you receive an inheritance, keep it in a separate investment/savings account.
• Sign a Pre-Nup - It’s a bit late for this one, but a good lesson for the possible next marriage.  If one partner has significantly more assets than the other, it is often advised to sign a pre-nuptual agreement before getting married.  That way, if the marriage goes to splitsville, the asset split will be pre determined.

As the title states, divorce is a wealth killer.  It will cut your net worth by about half which can be financially devastating if you are closing in on retirement.  Moral of the story?  Be careful about who you marry and sign a pre-nup if one spouse is entering a marriage with signifcantly more assets than the other.

Note:  I’m not a lawyer so please take the contents of this article as a starting point for your research.

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