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The Aspirational Investor

Taming the Markets to Achieve Your Life's Goals

by Ashvin B. Chhabra


The Chief Investment Officer of Merrill Lynch Wealth Management explains why goals, not markets, should be the primary focus of your investment strategy—and offers a practical, innovative framework for making smarter choices about aligning your goals to your investment strategy.

Today all of us bear the burden of investing wisely, but too many of us are preoccupied with the wrong priorities—increasing returns at all costs, finding the next star fund manager, or beating “the market.” Unfortunately conventional portfolio theory and the grand debates in finance have offered investors only incomplete solutions. What is needed, argues Ashvin B. Chhabra, is a framework that shifts the focus of investment strategy from portfolios and markets to individuals and the objectives that really matter: things like protecting against unexpected financial crises, paying for education or retirement, and financing philanthropy and entrepreneurship.

The Aspirational Investor is a practical, innovative approach to managing wealth based on key goals and the careful allocation of risks rather than responding to the whims of the financial markets. Chhabra introduces his “Wealth Allocation Framework,” which accommodates the three seemingly incompatible objectives that must underpin every sound wealth management plan: the need for financial security in the face of known and unknowable risks; the need to maintain current living standards over time despite inflation; and the need to pursue aspirational goals for wealth creation.

Chhabra reveals some surprising facts about wealth creation, reinterprets the success formulas of investing greats like Warren Buffett, and closes the gap between theory and practice by simplifying our understanding of key asset classes and laying out a concise roadmap for identifying, prioritizing, and quantifying financial goals. Raising the bar for what we should expect from our investment portfolios—and our financial advisors—The Aspirational Investor sets us on a path to more confident and fulfilling financial lives.

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Recommendations: 1

Categories: Money & FinanceInvesting & Trading

Reading time: 67 hours

Recommendations


Graham Duncan
Investor, Co-founder of East Rock Capital

So in financial markets, I really like this somewhat obscure book called The Aspirational Investor by this guy, Ashvin Chhabra, who runs Jim Simons’ family office. Jim Simons started Renaissance Technologies, which is the dominant quant fund. And one thing I like about Renaissance and Jim Simons, he has this line in a New Yorker profile of him that he thinks what he has is really good taste in interesting problems. And he uses the word taste. And it’s a similar – and this guy runs his family office. Used to run the endowment at the Institute for Advanced Study. And in the book, he identifies what he sees as the flaws in modern portfolio theory, which have totally dominated prevailing beliefs about investing for decades. And Ashvin suggested a totally different approach to portfolio construction based on how people actually behave and what they actually care about. And so that’s a book I give out a lot.