The Value of Debt: How to Manage Both Sides of a Balance Sheet to Maximize Wealt

Description: The Value of Debt by Thomas J. Anderson A New York Times bestseller and one of the Ten Best Business Books of 2013 by WealthManagement. FORMAT Hardcover LANGUAGE English CONDITION Brand New Publisher Description A New York Times bestseller and one of the Ten Best Business Books of 2013 by WealthManagement.com, this book brings a new vision of the value of debt in the management of individual and family wealth In this groundbreaking book, author Tom Anderson argues that, despite the reflex aversion most people have to debt—an aversion that is vociferously preached by most personal finance authors—wealthy individuals and families, as well as their financial advisors, have everything to gain and nothing to lose by learning to think holistically about debt. Anderson explains why, if strategically deployed, debt can be of enormous long-term benefit in the management of individual and family wealth. More importantly, he schools you in time-tested strategies for using debt to steadily build wealth, to generate tax-efficient retirement income, to provide a reliable source of funds in times of crisis and financial setback, and more. Takes a "strategic debt" approach to personal wealth management, emphasizing the need to appreciate the value of "indebted strengths" and for acquiring the tools needed to take advantage of those strengthsAddresses how to determine your optimal debt ratio, or your debt "sweet spot"A companion website contains a proprietary tool for calculating your own optimal debt ratio, which enables you to develop a personal wealth balance sheet Offering a bold new vision of debt as a strategic asset in the management of individual and family wealth, The Value of Debt is an important resource for financial advisors, wealthy families, family offices, and professional investors. Back Cover Virtually every CFO of a large company recognizes that both assets and debts can be sources of financial strength. Yet the vast majority of high-net-worth individuals are either perilously over-leveraged or, more commonly, tragically under-leveraged. In this groundbreaking book, author Tom Anderson argues that, despite the reflex aversion most people have to debt, wealthy individuals and families, as well as their financial advisors, have everything to gain and nothing to lose by learning to think holistically about debt, the way CFOs do. Viewing amortization as the enemy of good financial sense, with only a few notable exceptions, Anderson explains why, if strategically deployed, debt can be of enormous long-term benefit in the management of individual and family wealth. More importantly, he schools you in time-tested strategies for using debt to steadily build wealth, to generate tax-efficient retirement income, to provide a reliable source of funds in times of crisis and financial setback, and more. Taking a Strategic Debt approach to personal wealth management, he emphasizes the need to appreciate the value of "Indebted Strengths" and for acquiring the tools needed to take advantage of those strengths for increased liquidity, flexibility, leverage, and survivability. But, as he explains, before you can begin to leverage your indebted strengths, you must first determine your optimal debt ratio, or what he refers to as your debt "sweet spot." To that end, he describes methods CFOs use to determine their companies debt sweet spots, and he shows you how to apply those methods in finding yours. Anderson then supplies you with a set of advanced techniques for leveraging your indebted strengths, including: Capturing the spread, or, in other words, profiting from the difference between the value of an investment and cost of the debt incurred to make it A discussion on second homes (including renting versus buying) and a framework for how much of a second home you can afford (and how much of it should be financed) Better ways to purchase and finance cars, boats, and luxury items How you can help your children and grandchildren by using your balance sheet How access to the right kind of debt can help you and your family be better prepared for an emergency The best way to do eldercare transitions including bridge loans for you or someone in your family Alternative means of financing home improvements, college, real estate, raw land, and business investments Ways to create tax-favored income in retirement and divorce In addition, on The Value of Debt companion website youll find a proprietary tool for calculating your own optimal debt ratio. With inputs for assets and liabilities, it enables you to develop your personal wealth balance sheet and to compare it to examples provided by the author. Offering a bold new vision of debt as a strategic asset in the management of individual and family wealth, The Value of Debt is an important resource for financial advisors, wealthy families, family offices, and professional investors. Flap Virtually every CFO of a large company recognizes that both assets and debts can be sources of financial strength. Yet the vast majority of high-net-worth individuals are either perilously over-leveraged or, more commonly, tragically under-leveraged. In this groundbreaking book, author Tom Anderson argues that, despite the reflex aversion most people have to debt, wealthy individuals and families, as well as their financial advisors, have everything to gain and nothing to lose by learning to think holistically about debt, the way CFOs do. Viewing amortization as the enemy of good financial sense, with only a few notable exceptions, Anderson explains why, if strategically deployed, debt can be of enormous long-term benefit in the management of individual and family wealth. More importantly, he schools you in time-tested strategies for using debt to steadily build wealth, to generate tax-efficient retirement income, to provide a reliable source of funds in times of crisis and financial setback, and more. Taking a Strategic Debt approach to personal wealth management, he emphasizes the need to appreciate the value of "Indebted Strengths" and for acquiring the tools needed to take advantage of those strengths for increased liquidity, flexibility, leverage, and survivability. But, as he explains, before you can begin to leverage your indebted strengths, you must first determine your optimal debt ratio, or what he refers to as your debt "sweet spot." To that end, he describes methods CFOs use to determine their companies debt sweet spots, and he shows you how to apply those methods in finding yours. Anderson then supplies you with a set of advanced techniques for leveraging your indebted strengths, including: Capturing the spread, or, in other words, profiting from the difference between the value of an investment and cost of the debt incurred to make it A discussion on second homes (including renting versus buying) and a framework for how much of a second home you can afford (and how much of it should be financed) Better ways to purchase and finance cars, boats, and luxury items How you can help your children and grandchildren by using your balance sheet How access to the right kind of debt can help you and your family be better prepared for an emergency The best way to do eldercare transitions including bridge loans for you or someone in your family Alternative means of financing home improvements, college, real estate, raw land, and business investments Ways to create tax-favored income in retirement and divorce In addition, on The Value of Debt companion website youll find a proprietary tool for calculating your own optimal debt ratio. With inputs for assets and liabilities, it enables you to develop your personal wealth balance sheet and to compare it to examples provided by the author. Offering a bold new vision of debt as a strategic asset in the management of individual and family wealth, The Value of Debt is an important resource for financial advisors, wealthy families, family offices, and professional investors. Author Biography THOMAS J. ANDERSON worked in investment banking in New York before moving into private wealth management. His extensive academic studies at some of the top schools in finance and economics, international experience, and institutional background bring a unique perspective to delivering advice to the individual and on The Value of Debt. Table of Contents Foreword xi Acknowledgments xv Introduction xvii Part 1: The Value of Debt in the Management of Wealth 1 Chapter 1: Strategic Debt Philosophy: An Overview 3 How This Book Can Add Value to Your Life 3 The Five Tenets (or Action Principles) of Strategic Debt Philosophy 4 Chapter 1: Summary and Checklist 14 Chapter 2: The Basic Idea: Limiting the Costs, the Impacts, and the Duration of Financial Distress 21 Risk of Financial Distress 22 The Direct and Indirect Costs of Financial Distress 23 The Impact of Financial Distress: Five Levels 24 The Duration of Financial Distress 25 The Four Indebted Strengths: A First Look 26 The One Thing You Must Consider! 26 Chapter 2: Summary and Checklist 29 Chapter 3: Strategic Debt Practices: An Overview 33 Understanding and Taking Advantage of Strategic Debt Philosophy 34 Achieving and Maintaining an Optimal Debt-to-Asset Ratio 37 Calculating Your Debt-to-Asset Ratio 41 Should Your Primary Residence Be Included in Your Debt Ratio? 43 When to Pay Down Your Debt, and When Not To 45 Advanced Practices and Scenarios 47 Chapter 3: Summary and Checklist 49 Part 2: The Assets-Based Loan Facility 53 Chapter 4: The Value of an Assets-Based Loan Facility (ABLF) 55 What an ABLF is and How It Works 56 The Many Advantages of Having an ABLF in Place 59 Why Virtually Every Company Has a Line of Credit 61 Surviving Storms and Other Natural Disasters 62 The Criticality of Being Proactive and Assessing Risks 64 Family Finances: First Bank of Mom and Dad; Elder Care Bridge Loan 67 Taking Advantage of Opportunities and Distressed Sales 68 Average ABLF Usage and the Win-Win-Win Scenario 70 Chapter 4: Summary and Checklist 71 Part 3: Scenarios for Success 75 Chapter 5: Long-Term Wealth Amplification through Capturing the Spread 77 The Basic Concept: Inherent Risks with Great Potential Rewards 77 Three Key Factors to Consider 79 Some Scenarios for Capturing the Spread 83 Synching with Your Investment Strategy 93 Chapter 5: Summary and Checklist 93 Chapter 6: Holistic Financing of the Expensive Things You Need and Want 99 A Better Way to Buy: In the Company of Holistic Financial Thinkers 99 Four Principles When Financing the Purchase of a Desired Item 100 A Better Way to Purchase a Vehicle (or Almost Anything Else) 108 Purchasing a Second Home: Pluses and Minuses 111 100 Percent Financing: The No Down Payment Real Estate Purchase Option 117 Chapter 6: Summary and Checklist 119 Chapter 7: Generating Tax-Efficient Income in Retirement or Divorce 123 Introduction: Three Goals (and Some Disclaimers) 123 An Opening Scenario for No Taxes in Retirement 124 Borrowing Versus Selling to Access Your Money 125 A Better Alternative to a Familiar Story 127 Tying It Back to Capturing the Spread 128 Revisiting Tax Issues 130 Making Use of Strategic Debt Strategies and Practices in Divorce 138 Chapter 7: Summary and Checklist 143 Chapter 8: Conclusion: What This Book is Really About 149 What We Hope You Have Taken Away 150 Strategic Debt as a Financial Engine over the Decades 153 Paradoxes of Plenty: Some Surprises in Maintaining an Ideal Debt Ratio 158 Investing in the Future: A Cautionary Reminder 162 A Final Thought 164 Chapter 8 Summary: A Recap of the Books Significant Lessons 164 Part 4: Appendixes 169 Appendix A: The Varieties of Debt 171 Appendix B: Strategic Debt Practice for the Young and Those with Limited Assets 175 Appendix C: No Guarantees: Limiting the Risks of Investing in a Crazy World 185 Appendix D: Some Examples of Ideal Debt Ratios 209 Glossary 225 Bibliography 229 About the Author 231 About the Companion Website 233 Index 235 Long Description Praise for The Value of Debt "While most financial firms today are able to deliver integrated solutions, truly integrated financial advice remains a scarce commodity. With The Value of Debt, Tom Anderson takes an important, balanced, and clear step toward filling this void." Lyle LaMothe , Senior Partner at Left Hand Logic, LLC; former Head of Merrill Lynch U.S. Wealth Management "There are thousands of books and articles that discuss balance sheet structure and design for corporations but virtually no one is applying an academic framework to shape the dialogue for individuals. I read The Value of Debt with fascination. Toms ideas are simple but well grounded in theory. The book will benefit many, in particular, making debt a darling rather than a dirty word." Mahendra Gupta , Dean, Olin Business School, Washington University in St. Louis "This book applies fundamental concepts from corporate finance to personal finance. Tom Anderson provides an accessible and persuasive discussion of why and how debt should be an important tool in personal financial management. The sophisticated financial reader will gain many useful ideas, and enjoy the rigorous discussion of the tradeoffs and applications of Andersons ideas. This book represents a significant step forward for financial advisors. Highly recommended." Michael Gibbs , Faculty Director, Executive MBA Program; Clinical Professor of Economics, The University of Chicago Booth School of Business "The holistic approach presented in The Value of Debt provides an assortment of tools that transcend all aspects of your personal financial life. It will challenge your preconceived notions and encourage you to approach your financial life in a more cohesive way." Bill King , Chief Investment Officer, Carrington Capital Management, LLC "I found the book to be extremely readable, technically accurate as well as very provocative for those of us who are conservative in our use of debt." Eliot Protsch , Retired Chief Financial Officer, Alliant Energy "Tom has written a very interesting and thought-provoking book about an area of wealth management that not many others even think about. Capturing the spread is what business is all about and creating value vs. destroying value at the end of the day is what creates earnings per share. The Value of Debt challenges the conventional wisdom that all debt is bad." Jim Hoffman , Chairman, YRCW "An impressive achievement that can drive important conversations between clients and advisors." Stephen E. Vanourny , Global Head of Strategy, State Street Corporation Details ISBN1118758617 Language English ISBN-10 1118758617 ISBN-13 9781118758618 Media Book Format Hardcover Year 2013 Imprint John Wiley & Sons Inc Place of Publication New York Country of Publication United States Subtitle How to Manage Both Sides of a Balance Sheet to Maximize Wealth Author Thomas J. Anderson Pages 272 Illustrations Yes Edition 1st Short Title VALUE OF DEBT UK Release Date 2013-10-25 AU Release Date 2013-09-06 NZ Release Date 2013-09-06 Publisher John Wiley & Sons Inc Publication Date 2013-10-25 DEWEY 658.15 Audience Professional & Vocational US Release Date 2013-10-25 We've got this At The Nile, if you're looking for it, we've got it. With fast shipping, low prices, friendly service and well over a million items - you're bound to find what you want, at a price you'll love! TheNile_Item_ID:77020254;

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