Cover image for Personal financial planning : how to plan for your financial freedom
Personal financial planning : how to plan for your financial freedom
Hallman, G. Victor.
Personal Author:
Second edition.
Publication Information:
New York : MacGraw-Hill, [1978]

Physical Description:
xviii, 408 pages ; 24 cm
General Note:
Includes index.
Subject Term:
Added Author:
Format :

On Order



With more than 135,000 copies sold in previous editions, "Personal Financial Planning "has become one of today's top answer books for people who want to know what to do with their money, and why. This streamlined seventh edition provides in-depth coverage and analysis of the latest tax law changes. In addition, it features an entirely new chapter on planning and paying for education expenses, including the new 529 plans; ramifications of the GST estate tax repeal; new checklists and questions to tie up each chapter; and more.

Author Notes

G. Victor Hallman is a lecturer in estate and financial planning at the Wharton School of the University of Pennsylvania and associate director of the S.S. Huebner Foundation for Insurance Education. A popular financial consultant, he is the author or coauthor of many professional books
Jerry S. Rosenbloom is a professor and academic director of the Certified Employee Benefit Specialist Program at the Wharton School of the University of Pennsylvania. Also popular and well respected as a financial consultant, he has written numerous financial books and articles

Table of Contents

Prefacep. xxi
Part 1. Coordinated Financial Planningp. 1
1. Personal Financial Planning--The Processp. 3
What Is Personal Financial Planning?p. 3
Focus on Objectivesp. 4
Need for Personal Financial Planningp. 5
Steps in the Planning Processp. 6
Use of Financial Planning Statementsp. 7
2. Setting Financial Planning Objectivesp. 12
Importance of Setting Objectivesp. 12
Organizing Objectivesp. 12
Adjusting Objectives for Inflation and Possible Deflation (Recession or Depression)p. 23
Adjusting Objectives to Changing Tax Lawsp. 24
Part 2. Using Insurance Effectivelyp. 27
3. Personal Insurance Principles and Selecting Insurersp. 29
Personal Risk Managementp. 29
The Insurance Principlep. 30
Considerations in Choosing an Insurerp. 30
Considerations in Choosing an Agent or Brokerp. 34
4. Life Insurance and Social Securityp. 36
Sources of Life Insurance Protectionp. 36
Social Securityp. 38
Types of Individual Life Insurance Contractsp. 42
Definitions of Life Insurance for Income Tax Purposesp. 55
The Life Insurance Contractp. 57
Planning and Using Life Insurancep. 62
Substandard Risksp. 64
Nonmedical Life Insurancep. 64
What Actions Can an Uninsurable Person Take?p. 65
Group Life Insurancep. 65
How Much Life Insurance Is Needed?p. 67
5. Health Insurancep. 70
Sources of Health Insurance Protectionp. 70
Disability Income (Loss-of-Time) Coveragesp. 71
Medical Expense Coveragesp. 79
Individual Health Insurance Policy Provisionsp. 90
Medical Savings Accountsp. 92
Health Reimbursement Arrangements (HRAs)p. 93
6. Long-Term Care Insurance and Medicaid Planningp. 94
Nature of Exposurep. 94
Basic Planning Approachesp. 95
Long-Term Care Insurance and Other Arrangementsp. 95
Medicaid Planning for Long-Term (Custodial) Carep. 101
7. Property and Liability Insurancep. 109
Property Insurancep. 109
Personal Liabilityp. 110
Homeowners Insurancep. 112
Automobile Insurancep. 116
Other Property and Liability Policies to Considerp. 120
Insurance Companies and Premiumsp. 122
Part 3. Investments and Investment Planningp. 125
8. Basic Investment Principlesp. 127
The Basic Investment Objectivep. 127
Investment Directly or Through Financial Intermediariesp. 127
Investment and Speculationp. 129
Factors in the Choice of Investmentsp. 130
Security of Principal and Incomep. 130
Rates of Returnp. 137
Marketability and Liquidityp. 146
Diversificationp. 146
Tax Statusp. 148
Size of Investment Units (or Denominations)p. 148
Use of Collateral for Loansp. 148
Callabilityp. 148
Freedom from Carep. 149
9. Common Stocksp. 150
Characteristics of Common Stocksp. 150
Some Measures of Value for Common Stocksp. 150
Information About Common Stocksp. 154
The Investment Processp. 155
Diversifying a Common Stock Portfoliop. 157
Periodic Reviewp. 157
Decisions Concerning Selling Common Stocksp. 157
Dollar-Cost Averagingp. 158
The Mechanics of Buying and Selling Common Stocksp. 158
Margin Accountsp. 160
Selling Shortp. 160
Securities Investor Protection Corporationp. 161
Investment Categories of Common Stocksp. 161
Some Theories of Common Stock Investmentp. 164
Common Stocks and Market Cyclesp. 166
The Case for Long-Term Investments in Common Stocksp. 166
Some Caveatsp. 170
10. Other Equity Investmentsp. 174
Real Estatep. 174
Oil and Gas (Natural Resource) Venturesp. 182
Other Tax Sheltersp. 182
Impact of Passive Activity Loss Rulesp. 183
Put and Call Optionsp. 184
New Issues or Initial Public Offerings (IPOs)p. 186
Commodity Futures Tradingp. 186
Art, Antiques, Coins, Stamps, Gold, and Other Precious Metalsp. 188
11. Fixed-Income Investmentsp. 189
Types of Fixed-Income Investmentsp. 189
Ways of Taking Returns from Bondsp. 189
Corporate Bondsp. 191
Municipal Bonds (Munis)p. 192
U.S. Government Obligationsp. 196
Market Discount Bondsp. 199
Zero-Coupon Bonds (Zeros)p. 200
Preferred Stocksp. 201
Guaranteed Principal Fixed-Income Investmentsp. 202
Liquid Assetsp. 204
Conversion Privileges in Fixed-Income Securitiesp. 204
Bond Ratings and Investment Qualityp. 204
Strategies for Investing in Fixed-Income Securitiesp. 207
12. Mutual Funds and Other Investment Companiesp. 209
Kinds of Investment Companiesp. 209
Why Invest in Mutual Funds?p. 209
Disadvantages of Mutual Fundsp. 210
Types of Funds--Some Planning Considerationsp. 210
Regulation of Investment Companiesp. 213
How to Invest in Mutual Fundsp. 213
Distributions from and Exchanges of Mutual Fundsp. 214
Mutual Funds and Their Investment Objectivesp. 215
Getting Information About Mutual Fundsp. 222
Mutual Fund Performancep. 222
Mutual Fund Expensesp. 225
Factors Involved in Selecting Mutual Fundsp. 226
Planning Considerations for Mutual Fundsp. 227
Tax Aspects of Mutual Fundsp. 227
Exchange-Traded Fundsp. 230
Hedge Fundsp. 230
13. Asset Allocation Strategies and Modelsp. 232
Fundamentals of Asset Allocationp. 232
Steps in the Asset Allocation Processp. 233
Personal Factors and Asset Allocationp. 233
Investment Objectivesp. 235
Investment Policiesp. 236
Possible Asset Classes to Be Consideredp. 237
Investment Vehicles to Be Consideredp. 237
Return-Risk Considerationsp. 239
Allocations Within Asset Classesp. 243
How Investments (Asset Classes) Should Be Heldp. 243
Illustrations of Asset Allocation Strategiesp. 245
Part 4. Income Tax Planningp. 255
14. Income Tax Fundamentalsp. 257
The Federal Income Tax on Individualsp. 257
The Federal Income Tax on Corporationsp. 273
Pass-Through Business Entitiesp. 277
Federal Income Taxation of Trusts and Estatesp. 278
State and Local Income Taxesp. 280
15. Basic Income Tax Saving Techniques for Individualsp. 281
Eliminating or Reducing Taxesp. 281
Shifting the Tax Burden to Othersp. 287
Allowing Wealth to Accumulate Without Current Taxation and Postponing Taxationp. 288
Taking Returns as Capital Gainsp. 290
Taxation and the Capital Gains Lock-in Problemp. 290
Tax-Planning Caveatsp. 298
16. Charitable Givingp. 300
Basic Tax Principlesp. 300
Planning Techniquesp. 302
Part 5. Planning for Retirement and Capital Accumulation Plansp. 317
17. Employer-Provided Qualified Retirement Plans and Social Security Benefitsp. 319
Economic Problems of Retirement Yearsp. 319
Steps in Planning for Retirement Incomep. 319
Sources of Retirement Incomep. 320
Characteristics of Employer-Provided Retirement Plansp. 322
Pension Plansp. 333
Profit-Sharing Plansp. 336
Savings (Thrift) Plansp. 338
Stock Bonus Plans and Employee Stock Ownership Plans (ESOPs)p. 344
Hybrid Qualified Retirement Plansp. 345
Retirement Plans for the Self-Employed (HR-10 or Keogh Plans)p. 346
18. Other Employer-Provided Retirement Plans and Other Employee Benefitsp. 351
Other Employer-Provided Retirement Plansp. 351
Other Employee Benefitsp. 358
19. Individual Retirement Accounts and Annuities (IRAs)p. 361
Basic Conceptsp. 361
Types of IRAsp. 362
Other Aspects of IRAsp. 371
Planning Issues for IRAsp. 372
20. Planning for Taking Distributions from Qualified Retirement Plans and IRAsp. 377
General Considerationsp. 377
Taxation of Benefits from Qualified Plans and IRAsp. 379
Planning for Distributions from Qualified Retirement Plans and IRAsp. 397
21. Individual Investment Annuity Contractsp. 406
Fundamental Purposes of Annuitiesp. 406
Types of Individual Annuitiesp. 406
Parties to the Annuity Contractp. 409
Phases of Annuitiesp. 409
Investment Returns on Annuitiesp. 410
Expense Charges on Annuitiesp. 412
Withdrawals and Loansp. 413
Exchanges of Annuitiesp. 414
Annuity Distribution (Payout) Optionsp. 414
Annuity Death Benefitsp. 414
Split-Funded Annuitiesp. 415
Taxation of Nonqualified Annuitiesp. 416
Other Individual Annuity Arrangementsp. 418
Using Life Insurance Values to Provide Retirement Incomep. 418
22. Employee Stock Compensation Plansp. 420
General Considerationsp. 420
Types of Plansp. 420
Statutory Plansp. 421
Nonstatutory Plansp. 424
Provisions of Stock Option Plansp. 428
Valuation of Stock Optionsp. 431
Some Caveats Concerning Stock Options and Other Plansp. 434
Planning Issues Regarding Stock Options and Other Stock Plansp. 434
Part 6. Estate Planningp. 437
23. Estate Planning Principlesp. 439
Objectives of Estate Planningp. 439
Methods of Property Dispositionp. 440
Property and Property Interestsp. 441
What Is Meant by the "Estate"?p. 448
Settling the Estatep. 452
Trusts in Estate Planningp. 454
24. The Transfer Tax Systemp. 462
Impact of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA)p. 462
Applicable Credit Amount (Unified Credit) and Applicable Exclusion Amountp. 463
Federal Gift Taxp. 464
Federal Estate Taxp. 472
Federal Generation-Skipping Transfer (GST) Taxp. 480
25. Lifetime Giving and Sales Within the Familyp. 486
Making Lifetime (Inter Vivos) Gifts to Noncharitable Doneesp. 486
Sales Within the Familyp. 503
Loans to Family Membersp. 506
26. Marital Deduction Planning, Postmortem Planning, and Estate Liquidityp. 507
Marital Deduction Planningp. 507
Postmortem Estate Planningp. 522
Estate Liquidityp. 524
27. Life Insurance in Estate Planningp. 526
Taxation of Life Insurancep. 526
How to Arrange Life Insurancep. 533
Gifts of Life Insurancep. 540
28. Revocable Living Trusts, Other Will Substitutes, and Property Management Arrangementsp. 544
Revocable Living Trusts as a Will Substitutep. 544
Joint Property with Right of Survivorshipp. 548
Property Management Arrangements to Deal with Physical or Mental Incapacityp. 549
29. Financing Education Expensesp. 552
Importance as a Financial Objectivep. 552
Nature and Growth of Education Costsp. 552
Estimating Education Costsp. 553
Financial Aid Considerationsp. 554
Tax "Breaks" for Education Costsp. 555
Strategies in Planning for Education Costsp. 557
30. Planning for Business Interestsp. 572
Potential Issuesp. 572
Characteristics of Closely Held Businessesp. 573
Types of Business Entitiesp. 573
Check-the-Box Regulationsp. 581
Income Tax Basis in Business Interestsp. 582
Factors in Choice of Entityp. 583
Disposition of Business Interestsp. 588
Retention of Business Interestsp. 598
Indexp. 601