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| Acknowledgments | |
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| Introduction | |
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| A Travel Guide to Alternative Investments | |
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| Modern Portfolio Theory | |
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| The Good, the Flawed, the Bad, and the Ugly | |
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| The Good | |
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| Real Estate | |
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| Historical Returns and Risk: U.S. Real Estate, U.S. Equities, and International Equities | |
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| The Diversification Benefits of REITs | |
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| Benefits of Diversification: Sample Portfolios | |
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| Asset Location and Real Estate | |
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| Recommended Investment Vehicles | |
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| International Real Estate | |
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| DRW, RWX, and WPS | |
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| DFA International Real Estate Securities Portfolio | |
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| Tax Considerations | |
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| The Wrap-Up on International REITs | |
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| Your Home and the Asset Allocation Decision | |
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| Wrap-Up on the Home as an Investment | |
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| Wrap-Up on Direct Ownership | |
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| Summary | |
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| Inflation-Protected Securities | |
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| Real or Nominal Return Bonds: Which Are Riskier? | |
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| TIPS: Doing the Math | |
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| Correlations with Equities and Inflation | |
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| Inflation, Price, and Interest Rate Risk | |
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| Inflation Risk | |
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| Price Risk | |
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| Interest Rate Risk | |
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| TIPS: Pros and Cons | |
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| Pros | |
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| Cons | |
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| Allocating Between Real and Nominal Return | |
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| Fixed-Income Assets | |
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| A Shifting Allocation Approach | |
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| Developing a Strategy | |
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| Implementation | |
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| A Shifting Maturity Strategy | |
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| I Bonds | |
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| Summary | |
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| Commodities | |
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| Correlation with Stocks, Bonds, and Inflation | |
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| Event Risk | |
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| A Risk-Reduction Tool | |
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| Portfolio Efficiency | |
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| Gaining Exposure to Commodities | |
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| Mutual Funds: QRAAX and PCRIX | |
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| Commodity-Related ETFs | |
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| Commodity-Related ETNs | |
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| CTAs | |
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| The Argument Against Investing in Commodity Producers | |
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| The Equities of Oil Producers | |
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| Implementation | |
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| Summary | |
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| International Equities | |
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| Emerging Markets Equities | |
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| Correlations | |
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| Sample Portfolios | |
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| The Risks of Investing in Emerging Markets | |
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| Small-Cap and Value Stocks | |
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| Recommended Vehicles | |
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| Wrap-Up: Emerging Markets | |
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| International Small-Cap Stocks | |
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| Sample Portfolios | |
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| Recommended Vehicles | |
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| Summary | |
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| Fixed Annuities | |
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| How Long Do Payments Continue? | |
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| Determinants of Payment Size | |
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| The Benefits of Annuitization | |
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| Mortality Credits Make It Possible | |
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| When Annuities Can Be the Right Choice | |
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| Evidence from Academia | |
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| When to Purchase a Fixed Annuity | |
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| Inflation-Indexed Immediate Annuities | |
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| Summary | |
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| Stable-Value Funds | |
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| Unique Risk and Return Characteristics | |
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| Investment Portfolios | |
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| Risks | |
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| Costs | |
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| Restrictions | |
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| Returns Change Slowly Over Time | |
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| Cash Flows Can Affect Returns | |
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| Summary | |
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| The Flawed | |
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| High-Yield (Junk) Bonds | |
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| Explaining the Low Correlation | |
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| Is Higher Yield Worth Higher Risk? | |
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| The Importance of Equity Risk | |
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| Hybrid Securities and Asset Allocation | |
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| Evidence Supported by Theory | |
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| Do High-Yield Bonds Have a Role? | |
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| Illiquid Securities | |
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| Other Negative Characteristics | |
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| Distribution of Returns Matters | |
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| High-Yield Bonds and Efficient Frontier Models | |
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| Inflation Risk | |
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| Asset Location | |
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| The Need for Diversification | |
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| The Historical Evidence | |
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| Vanguard High-Yield Corporate Fund | |
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| More Efficient Alternatives | |
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| Summary | |
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| Private Equity (Venture Capital) | |
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| Origins | |
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| The Attraction | |
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| The Historical Evidence | |
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| Characteristics of Private Equity Returns | |
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| Venture Capital Versus Publicly Traded Securities | |
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| Inefficient Diversification | |
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| Bias in the Data | |
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| Perception Versus Reality | |
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| Private Equity's Role in a Portfolio | |
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| Nonmonetary Explanations for Private Equity Investing | |
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| Summary | |
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| Covered Calls | |
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| Taxes Matter | |
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| Transactions Costs | |
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| An Alternative Strategy | |
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| Summary | |
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| Socially Responsible Mutual Funds | |
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| Defining SRI | |
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| Rapid Growth | |
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| Does Socially Responsible Investing Come at a Price? | |
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| The "Price" of Principles | |
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| Summary | |
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| Precious Metals Equities | |
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| Risk | |
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| Returns | |
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| Correlations | |
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| The Hedging Value of PME | |
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| Positive Attributes of PME | |
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| Other Considerations | |
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| Implementing the Strategy | |
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| Summary | |
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| Preferred Stocks | |
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| Long Maturities | |
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| Risks and Rewards of Long Maturities | |
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| Call Risk | |
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| Credit Risk | |
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| Long Maturities and Call Risk | |
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| Dividend Suspension | |
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| Preferential Treatment for Corporate Buyers | |
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| Other Considerations | |
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| Tax Advantages | |
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| Summary | |
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| Convertible Bonds | |
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| The Realities of Convertible Bonds | |
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| Considerations | |
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| Shifting Asset Allocation | |
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| Asset Location | |
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| Complexity | |
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| Summary | |
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| Emerging Market Bonds | |
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| Risks | |
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| Returns | |
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| Correlations | |
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| Potential Positives | |
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| Additional Considerations | |
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| Summary | |
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| The Bad | |
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| Hedge Funds | |
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| Exclusive Nature | |
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| Why Hedge Funds Aren't Mutual Funds | |
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| Facts Versus Fantasies | |
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| Hedge Fund Risks | |
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| Wisdom and Experience, or Hope and Hype? | |
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| The Cost of Folly | |
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| How High an Alpha Does a Hedge Fund Need? | |
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| How Funds of Funds Increase Hurdles to Outperformance | |
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| The "Ill-Logic" of Hedge Funds | |
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| Long-Term Capital Management | |
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| The Death of Genius | |
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| LTCM's Downfall: The Tyranny of Market Efficiency | |
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| Risk Versus Uncertainty | |
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| Fooled by Randomness | |
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| Summary | |
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| Leveraged Buyouts | |
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| Summary | |
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| Variable Annuities | |
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| Deferred Variable Annuities | |
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| Tax-Deferred Growth of Earnings | |
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| The Life Insurance Component | |
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| Ability to Annuitize | |
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| Other Negative Features | |
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| Are VAs Really That Bad? | |
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| Sold or Bought? | |
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| The Art of Deception | |
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| Variable Immediate Annuities | |
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| How Payments Are Determined | |
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| The Purpose of Immediate Annuities | |
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| Possible Reasons to Buy a Variable Annuity | |
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| 1035 Exchanges | |
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| Other Considerations | |
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| Summary | |
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| The Ugly | |
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| Equity-Indexed Annuities | |
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| Caveat Emptor | |
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| Minimums That Aren't Minimums | |
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| Penalties for Early Withdrawal | |
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| Tax Inefficiency | |
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| Summary | |
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| Structured Investment Products | |
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| Mondo National Bank Principal Protection | |
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| Notes: Product Features | |
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| More Efficient Alternatives | |
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| A Closer Look at Hypothetical FRATS | |
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| Why Such "Attractive" Terms? | |
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| More Efficient Alternatives | |
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| Being Careful Out There | |
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| Summary | |
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| Leveraged Funds | |
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| The Proof Is in the Pudding | |
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| Summary | |
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| Final Thoughts | |
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| Notes | |
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| Glossary | |
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| Recommended Reading | |
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| Sources of Data | |
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| Index | |