LIFE CYCLE INVESTING: Investing for the Times of Your Life

A wide-ranging, generally unexceptionable survey of investment vehicles, packaged to provide cradle-to-grave guidance for Wall Street novices. Nichols assumes investors' lives have five main stages: birth through age 21; 22-30; 30-45; 45-55; and 55-65. Admittedly arbitrary and susceptible to overlap, his divisions nonetheless afford a convenient framework for generalized guidance. For younger adults, the focus is on capital accumulation, the author notes, adding that those with children normally can expect to face college tuition bills within 18 years. Likewise, mature individuals in mid-career may reasonably anticipate needing funds to tide themselves over periods of unemployment, support an aging parent, or provide for retirement. A virtue of the Nichols approach is the premium it places on being prepared to institute responsive adjustments in one's investment program as the years roll by and personal circumstances change. Within this adaptive context, the author reviews investment opportunities ranging from annuities, common stocks, exchange-listed options, fixed-income instruments, futures contracts, mutual funds, precious metals, and unit trusts through zero-coupon bonds. In addition, Nichols offers a flexible checklist of criteria--e.g., safety of principal, current income, appreciation potential--against which various commitments can be weighed; he puts the relative importance of such considerations in perspective for each cycle. Also covered are asset-allocation techniques, dollar-cost averaging, inflation hedges, self-directed pension plans (like IRAs), stock-purchase programs (on the job), and shelters (which, Nichols cautions, should make economic as well as tax sense). Among other worthwhile features, the text furnishes commendably clear explanations of the trade-offs involved in a wealth of alternative investments. Income-minded individuals, he observes, might realize higher returns purchasing bonds through a discount broker than by buying into a fund that levies an up-front sales commission. Along similar lines, he points out that income from US Government obligations is exempt from state and local taxes, making direct purchases preferable in most cases to investment in Treasury-issue funds whose payouts are deemed dividends rather than interest. For beginners in search of self-help investment advisories, a ready, reliable reference.