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Strategic Financial Planning over the Lifecycle


  • 20 b/w illus. 59 tables
  • Page extent: 382 pages
  • Size: 228 x 152 mm
  • Weight: 0.68 kg

Library of Congress

  • Dewey number: 332.024
  • Dewey version: 23
  • LC Classification: HG179 .C5354 2012
  • LC Subject headings:
    • Finance, Personal
    • Risk management
    • Wealth--Management
    • BUSINESS & ECONOMICS / Accounting / Financial.--bisacsh

Library of Congress Record

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 (ISBN-13: 9780521764568)

Manufactured on demand: supplied direct from the printer

 (Stock level updated: 17:17 GMT, 24 November 2015)


This book on personal financial planning and wealth management employs the lifecycle model of financial economics. The central idea of 'consumption smoothing' is used to connect chapters and topics such as saving and investment, debt management, risk management and retirement planning. The first part of the book is nontechnical and aimed at a wide audience with no special technical background. The second part of the book provides a rigorous presentation of the lifecycle model from first principles using the calculus of variations. The accompanying website is found at

• Uses the lifecycle model of Nobel Laureate Franco Modigliani as the unifying theme for understanding finance • Blends practical advice with technical rigor on all features of strategic financial planning • Slides for teaching the book and a solutions manual will be available to instructors


1. Introduction and motivation; 2. Mathematical preliminaries - working with interest rates; 3. Personal balance sheet and human capital; 4. Consumption smoothing and optimal savings; 5. Debts, loans, and mortgages [Canadian content]; 6. Personal income taxes [Canadian content]; 7. Risk, utility, and insurance; 8. Mortality risk and life insurance; 9. Investment and diversification; 10. The mathematics of portfolio diversification; 11. Housing decisions; 12. Pensions and retirement [Canadian content]; 13. Advanced material*: Part I. Continuous time and the calculus of variations; 14. Advanced material*: Part II. Stochastic optimal control and the HJB equation; 15. Concluding thoughts and next steps.


'This book distils many decades of financial economics research into a holistic and rigorous approach to financial planning. Master this book, and you will master your own financial future.' Jeffrey Brown, University of Illinois

'Strategic Financial Planning over the Lifecycle is a sophisticated personal investment textbook that shows how an individual can manage risk and consumption while taking into account earnings and savings, housing and mortgages, investment and portfolio diversification, and human capital and insurance, all while preparing for retirement and all the other contingencies that happen during a lifetime. The book is readily accessible to students, while providing in-depth analysis for the professional financial planner.' Roger G. Ibbotson, Yale University

'This book uses rigorous models to address several key decisions an individual must make. The authors discuss the model's implications lucidly. This book is for serious financial advisors who want to do their job better.' William Reichenstein, Baylor University

'This book is unique in deriving the formulas for annuity pricing from basic economic theory, making it useful for finance practitioners and, importantly, intellectually satisfying.' Eytan Sheshinski, The Hebrew University, Israel

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