POLL: Do you have a written investment plan?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

Do you have a written investment plan?

Yes
132
47%
No
148
53%
 
Total votes : 280

POLL: Do you have a written investment plan?

Postby DRiP Guy » Wed Feb 24, 2010 3:54 pm

I'm not asking how long you've had it, if you follow it, or what it contains (though I would love for participants to volunteer that type of information).

Just want to know:

Do you have a written investment plan?
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Postby simplesimon » Wed Feb 24, 2010 3:58 pm

Yeah, but I haven't looked at it in a while.
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Postby retiredjg » Wed Feb 24, 2010 4:01 pm

Mine is only about 5 sentences in the corner of an account printout, scratched there when I rebalanced once. But yes, it is a plan. And yes, it is written. And yes, I do refer to it when I'm wondering just what it was I decided a couple of years ago.
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Postby Whatyear? » Wed Feb 24, 2010 4:05 pm

Yes, but my plan is new this year and consists of about 5 bullet points in excel.
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Postby DRiP Guy » Wed Feb 24, 2010 4:14 pm

jg,

My personal plan is also rudimentary, and was not updated recently, though I really feel making one made me sit and think things through -- what is my target asset allocation, both during accumulation and decumulation, etc.

Here is the entire thing.

I think it is time not only for an update, but also refinement and extension/expansion.

Can anyone offer elements that you think are essential for a good plan?

Not sure where I got the template, but it seemed a good place to start three years ago.

Personal Investment Plan
05 May, 2007

1. Determine your time horizon (the amount of time you can sit on your investments)
3 years for cash-like, 10 years for retirement accounts

2. Gauge your level of risk tolerance.
Moderate short term, low long-term

3. Let your age play a role. Baby Boomers want low risk, capital preservation stocks and/or funds.
46, retiring between 47&48

4. Define your investing profile: This is the breakdown of your investment type. Add the proper investments that agree with your investment plan.
* 60% US equity indexes; split equally in small, mid, large
* 10% International equity index
* 20% Short term Bond fund
* 10% Cash/near cash

5. Balance your portfolio at least annually so it constantly reflects your investment plan. Always stay on top of your investments unless you rather pay someone else to do it for you.
Doing it.

6. Check credit from one of the three major agencies once every four months for free.
Doing it.
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Postby SamB » Wed Feb 24, 2010 4:20 pm

Every year there is a written review as well as a meeting. I call it the annual financial report. It has four sections, where we started, what we did, where we ended up and what we plan to do. The policy changes, if any end up in the what we plan to do section. This whole thing is basically an annual accounting exercise, but there are a number of financial changes each year that need to be planned for, college expenses, house expenses, car purchases, retirement or job changes, whatever. All of these things may affect how you manage your money, so it is very useful to do this once per year.

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Postby retiredjg » Wed Feb 24, 2010 4:28 pm

Can anyone offer elements that you think are essential for a good plan?

Have you seen the suggestions in the Wiki? Lots of good info here. Please see Investment Policy Statement on the Bogleheads Wiki.
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Postby DRiP Guy » Wed Feb 24, 2010 4:39 pm

retiredjg wrote:
Can anyone offer elements that you think are essential for a good plan?

Have you seen the suggestions in the Wiki? Lots of good info here. Please see Investment Policy Statement on the Bogleheads Wiki.


Doh.

What a doofus I am. I shoulda known that the heavy lifting had already been done by the excellent Boglehead Wiki-elves! Thanks for pointing that out, and while I still don't discourage anyone from commenting or throwing ideas out here as much as they like, if you have an idea you think is really important, then think about adding it to the Wiki, rather than just to this single thread!

8)
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Postby retiredjg » Wed Feb 24, 2010 4:44 pm

Tip of the hat to those elves! :wink:
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Postby Opponent Process » Wed Feb 24, 2010 4:46 pm

also recommend a simplified version or new plan for the spouse in case of emergency. in my case it's "Move everything to Target Retirement Income (but keep working)".
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Postby DRiP Guy » Wed Feb 24, 2010 4:56 pm

Opponent Process wrote:also recommend a simplified version or new plan for the spouse in case of emergency. in my case it's "Move everything to Target Retirement Income (but keep working)".


YES!

Although obviously not supplanting a will or trust or other doc, having a 'chart' of expected or required 'movements' to be made on life change (including death) is a good area. My own was deficient in not giving both pre and post retirement allocations -- they were different.
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Written plan?

Postby Taylor Larimore » Wed Feb 24, 2010 5:00 pm

Do you have a written investment plan?


No. We have a very simple investment plan which my wife and I understand.
"Simplicity is the master key to financial success." -- Jack Bogle
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Postby lemme think » Wed Feb 24, 2010 5:09 pm

Opponent Process wrote:also recommend a simplified version or new plan for the spouse in case of emergency. in my case it's "Move everything to Target Retirement Income (but keep working)".


YES!! I was thrilled when my husband actually asked me to create a "Big Picture" document. I have always enjoyed financial planning, he doesn't want a thing to do with it.

I wrote the plan in his language -- we've agreed to review and update annually, at a time of his choosing, since I'm happy to talk about it any time!!
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Postby conundrum » Wed Feb 24, 2010 5:22 pm

Yes, we have a written IPS. Our plan and asset allocation have not changed in many years. I do review our IPS with my wife quarterly and rewrite it occasionally to make it more clear to her. Explaining it has forced me to maintain a fairly simple and easy to follow plan and has been very educational for me as well.

Drum :lol:
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Postby bob90245 » Wed Feb 24, 2010 5:34 pm

Well, I suppose it is a written investment plan. I don't explicitly think of it that way, but I think it qualifies.

I have an Excel spreadsheet that shows all my accounts (taxable, IRA, 401k, checking, paper I-bonds) with the individual amounts and percentage to the total amount -- Total Net Worth. Off the side, the accounts are broken out by asset class (cash, bonds, and all stock categories).

Then in another area are two columns that summarizes all asset categories: left side shows actual dollar amount, right side shows dollar amount away from target. When actual dollars drifts away from target dollars by a specific amount, I rebalance. Else, do nothing while continuing to monitor and update amounts once a week.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Postby Glenn » Wed Feb 24, 2010 5:34 pm

Yep, I've had one for about five years . I also included a much simplified plan for my wife in the event that I croak unexpectedly. It's all in the fire safe.
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Postby Tonen » Wed Feb 24, 2010 7:20 pm

Yes, but I think I have messed up the postage stamp its written on.
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Postby mickeyd » Wed Feb 24, 2010 7:29 pm

Frankly, I'm very surprised that the survey is not more slanted in favor of those who have a plan since that is so basic to a successful long-term investment portfolio strategy.

My IPS, written over 10 years ago, has been tweaked over a dozen times, but not within the last 3 years. When I first started it it was all over the place, but over time, I began to really get a good idea of what I wanted to do. I guess that I have finally settled on a plan as I have been working it for a time and have not found a need to make any alterations.

The good thing about developing your own IPS is that you own it and know that it will only be altered as needed by YOU and you alone.
Last edited by mickeyd on Wed Feb 24, 2010 8:19 pm, edited 1 time in total.
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Postby synergy » Wed Feb 24, 2010 7:52 pm

Here is my plan. Each month I compare my actual to my plan and deposit new money to try to match my plan. It has taken me about 2 years of slowly adjusting so that I could minimize the tax consequences but I am within 2% in each category. Having a plan to shoot for has been a terrific help in staying calm during different market conditions.

Investment Goals

Bonds 55.00%
Equities 30.00%
Real Estate 3.30%
Cash 5%
Annuity 3.40%
Insurance 3.30%

Total 100.00%
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Postby speedbump101 » Wed Feb 24, 2010 7:57 pm

Absolutely... It was written with professional help, notarized, and resides with our other legal and estate documents.

For me the process of creating this far outstrips the physical document itself. It took a lot of planning, and a very detailed examination of our need to take risk, ability to do so, and our psychological tolerance (as best estimated) to be able to stay on track.

This IPS did not change one iota during the 2008 / 2009 meltdown.

Personally I think this document, and the research done creating it, is one of the most significant financial moves I've made in 35 yrs of investing.

SB...
"Man is not a rational animal, he is a rationalizing animal" -Robert A. Heinlein
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Postby mickeyd » Wed Feb 24, 2010 8:11 pm

speedbump101 wrote:This IPS did not change one iota during the 2008 / 2009 meltdown.



Excellent test...and you were not charged a dime for the event. :wink:
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Postby Robert T » Wed Feb 24, 2010 8:31 pm

.
=> The short version....Image

=> The long version (or thereabouts)

    "Without a rock-solid belief in the fundamental principles that undergird an intelligently crafted portfolio, weak-kneed investors face the likelihood of a disastrous whipsaw." - David Swensen
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Postby speedbump101 » Wed Feb 24, 2010 9:00 pm

mickeyd wrote:
speedbump101 wrote:This IPS did not change one iota during the 2008 / 2009 meltdown.



Excellent test...and you were not charged a dime for the event. :wink:


Not quite sure what you mean by this?

Of course our portfolio was down many dimes, however it never lost its ability to deliver what it was designed to.

We have a preset minimum dollar value of fixed income called 'foundational fixed income.' The FFI is firewalled and we will not re-balance below that amount. The amount of FFI in dollars is exactly linked to our minimum portfolio needs, and will not be compromised. All amounts above foundation in our FI will be rebalanced as per our bands...

Very few moving parts are involved, and no emotional decisions need to be made on the fly...

This works fine for us, which at the end of the day is what investing is all about, right?

SB...
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Postby BigD53 » Wed Feb 24, 2010 9:21 pm

No. My portfolio is so simple, even a caveman could do it.

People make this stuff much more complicated than it need be. :roll:
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Re: POLL: Do you have a written investment plan?

Postby Regal 56 » Wed Feb 24, 2010 9:45 pm

Do you have a written investment plan?

Yes, and it sometimes forces me to do things I'd prefer not to do. Early this year I bought an emerging markets fund for my Roth, even after last year's incredible run for emerging markets. I bought it only because it's next on my investment plan's to-do list. I really had to grit my teeth when I pulled the trigger. But that's the point of an investment plan, I suppose: it takes emotion out of the investment decision. Nonetheless, since I'm an almost infallible contrary market indicator, I expect emerging markets to crater this year.

By the way, my own experience has proven conclusively that the ability to predict the market isn't impossible, as Bogleheads would have us believe. Every single time I buy a new fund, the asset class covered by it goes down for at least six months—after I've bought, of course. Feel free to ride that tip all the way to Easy Street. You can show your gratitude by christening your yacht "Regal 56."
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Postby CTBob » Wed Feb 24, 2010 9:48 pm

I have a draft that I keep toying with. The problem is with the discrepancy between what I want it to be, what my investments are now, and my inertia in doing anything about the difference.
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Postby DRiP Guy » Wed Feb 24, 2010 10:24 pm

Robert T wrote:=> The short version....Image


Thanks Robert -- don't hide your light under a bushel -- IMHO, everyone should go look at this post:

=> The long version (or thereabouts)

That's a lot of work and a lot of thought you applied back then, and IMHO, it deserves to be revisited!

Thank you!
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Plan includes a record of decisions

Postby grabiner » Wed Feb 24, 2010 10:51 pm

I have had an IPS for several years, and while I can invest without it, the plan has a record of the decisions I made, so I do not need to re-think them every time.
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Postby LadyGeek » Wed Feb 24, 2010 10:54 pm

DRiP Guy wrote:I shoulda known that the heavy lifting had already been done by the excellent Boglehead Wiki-elves!
I just happened to take a look at the wiki. Wouldn't you know it? Some elf just added Robert T's thread in the Links section. :wink:

Please see Investment Policy Statement on the Bogleheads Wiki.
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Postby DRiP Guy » Wed Feb 24, 2010 11:15 pm

LadyGeek wrote:I just happened to take a look at the wiki. Wouldn't you know it? Some elf just added Robert T's thread in the Links section. :wink:


Awesome, those elves!

8)
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Postby teacher » Wed Feb 24, 2010 11:35 pm

LadyGeek worte:
I just happened to take a look at the wiki. Wouldn't you know it? Some elf just added Robert T's thread in the Links section.


Thanks LadyGeek(elf). I want to take a look at Robert T's plan when I have more time, and now I can access it any time.

This is a great thread. Our plan is still a living document so I am very interested to see what others have included in theirs.
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Postby mickeyd » Thu Feb 25, 2010 7:54 pm

Not quite sure what you mean by this?


You received invaluable experience about your AA (that it was good), and no one charged you a fee to obtain that experience.
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Postby serbeer » Thu Feb 25, 2010 8:18 pm

I answered No, even though I think that
    * rather sophisticated Excel Budget spreadsheet which also calculates my household cash flow and emergency reserve requirement
    * enormously complex asset allocation spreadsheet which allows to keep track of AA (while tax-adjusting it), cost basis, portfolio expenses and ROR across multiple accounts and loss-harvest or rebalance with ease if necessary
    * stochastic model that attempts to project our major expenses and net worth 40 year into the future
should buy me some slack there.

But no, I do not have "written investment plan." What do I need it for?
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Postby DaleMaley » Thu Feb 25, 2010 8:32 pm

I have had a formal IPS since 2006. I think I copied Sue Steven's format when I started it.

I do a financial review every year at Christmas time. Once I complete the review, I review it with my soon to be CPA daughter (my wife doesn't like financial stuff at all). As part of this review, I update the following documents, review them with my daughter, and file paper copies in a file cabinet folder where they can easily be found if I die. Documents include:

1. IPS
2. Financial Plan (results for previous year and changes for current year)
3. Instructions to my wife if I kick the bucket

These documents are stored right next to our estate planning documents which include bypass trusts and wills.
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Postby traineeinvestor » Thu Feb 25, 2010 8:35 pm

Yes. In addition to running a balance sheet for our assets and liabilities and an income and expense statement we also have a written retirement plan which covers investments objectives/planning as well as other issues (e.g. life insurance, schooling for our children etc). The spread sheets get updated monthly. The retirement plan gets updated 2-3 times a year.

Even for the non-wealthy family, I found "Strategy for the Wealthy Family" by Mark Haynes Daniell to be useful/interesting.
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Postby likegarden » Thu Feb 25, 2010 8:41 pm

Yes, I have one. I wrote it up 5 years ago after I had a financial plan made by Vanguard Planning, and after I read applicable books by Morningstar, and Boglehead authors. That IPS did clear up my mind about the goals for my portfolio and the finances during retirement. I should have made one 30 to 40 years ago though! It is also appropriate educational reading for my family after I am gone.
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Postby Disciple » Thu Feb 25, 2010 9:30 pm

I'm working on one.
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Postby tetractys » Thu Feb 25, 2010 11:59 pm

Yes I have an IPS, where are kept decisions and the reasons for them, and formulas I may need again, so I'll never have to figure the same things out twice.

I also have a short term list for things like, don't buy any VGXYZ in any account until such and such a date to avoid the wash sale, or like, save up so much for the next x-action which will be such and such because of this or that. I've found it expedient to allow each task to complete itself through confirmation before moving on with the next task--one step at a time without tripping.

Some things take a bit of thought, and once is enough. -- Tet
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Postby Sunny Sarkar » Fri Feb 26, 2010 1:53 am

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Postby Snowjob » Fri Feb 26, 2010 7:50 am

It probably doesnt count if you are constantly adjusting it...

I would have a pretty set & standard savings IPS but its so simple it doesnt require to be written down -- and thankfully that one doesnt change often :D
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Postby FamilyMan » Fri Feb 26, 2010 8:14 am

I said no because that was a 2010 New Year's resolution that hasn't been done yet :roll:
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Postby DRiP Guy » Fri Feb 26, 2010 9:44 am

FamilyMan wrote:I said no because that was a 2010 New Year's resolution that hasn't been done yet :roll:


heh heh


I would imagine that you are likely in the camp of many of the others who responded 'no' -- the fact you intended to be able to create a written plan has at least let you develop a conceptual plan, which I hope you are following....


Many asked why they 'need' a written plan, and of course, if you like spreadsheets or whatever, and that works for you, then who is going to tell you that you 'must' have a separate textual plan? However, I find that having a goal literally written down has always been the best way for me to achieve it, so if financial/retirement planning really does involve one of the most important life goals for most of us reading this, achieving our financial freedom, then...
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Postby gkaplan » Fri Feb 26, 2010 9:54 am

I finally got around to creating my plan late last year, using the wiki example as a guideline.
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Postby trico » Fri Feb 26, 2010 10:00 am

Mine is so simle it does not need to be written down. it goes Waste nothing and save everything. That simple, and has worked well.
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Postby EmergDoc » Fri Feb 26, 2010 10:26 am

speedbump101 wrote:Absolutely... It was written with professional help, notarized, and resides with our other legal and estate documents.

For me
the process of creating this far outstrips the physical document itself.
It took a lot of planning, and a very detailed examination of our need to take risk, ability to do so, and our psychological tolerance (as best estimated) to be able to stay on track.

This IPS did not change one iota during the 2008 / 2009 meltdown.

Personally I think this document, and the research done creating it, is one of the most significant financial moves I've made in 35 yrs of investing.

SB...


Agree with above in that the process is what counts, but notarized?

I was surprised and a little disappointed that half the people on this forum don't have any kind of written plan at all. It can be scribbled on a napkin, but having it written is important I think.
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Postby speedbump101 » Fri Feb 26, 2010 11:21 am

EmergDoc wrote:
speedbump101 wrote:Absolutely... It was written with professional help, notarized, and resides with our other legal and estate documents.

For me
the process of creating this far outstrips the physical document itself.
It took a lot of planning, and a very detailed examination of our need to take risk, ability to do so, and our psychological tolerance (as best estimated) to be able to stay on track.

This IPS did not change one iota during the 2008 / 2009 meltdown.

Personally I think this document, and the research done creating it, is one of the most significant financial moves I've made in 35 yrs of investing.

SB...


Agree with above in that the process is what counts, but notarized?

I was surprised and a little disappointed that half the people on this forum don't have any kind of written plan at all. It can be scribbled on a napkin, but having it written is important I think.


Because it's a legal document. It along with our wills give specific instructions to our executor, and to whomever our son chooses to manage our / his portfolio / estate when we are gone.

The process of setting this up required long term planning (a lot), and unless situations unexpectedly change, it's cast in stone...
I'm extremely happy with the result...

Like many here I had an 'in my head IPS' for many years... Moving that IPS to paper took significant time and thought. The process of converting thoughts to words was much more difficult than I thought it would be; considering I'm not only creating it for personal use, but also expecting it to give direction to a third party when we're gone.

SB...
"Man is not a rational animal, he is a rationalizing animal" -Robert A. Heinlein
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Postby Cernel » Fri Feb 26, 2010 11:46 am

Yes, I have a written Financial Plan which I just initiated in 2008. I review it at least once a year, towards YE, but take a peak at it mid-year just to make sure I am sticking to my plan.

When establishing the plan, I followed the guidance outlined in the IPS Wiki document, with a few modifications. Included in my plan is our investment philosophy, financial goals/objectives, investment strategy, assets allocation, re-balancing strategy, withdraw strategy, assumptions about longevity, when to take SS, and IRA Conversion strategy.

The value this written document provides for me is that when I get a temptation to do something radical, I always come back and read the document. Helps me stay the course. This is not to say that I haven't made modifications over the course of the past two years, but it does help me stay honest with myself when I get these hair-brain ideas of doing something radical.
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Postby Robert T » Fri Feb 26, 2010 8:57 pm

LadyGeek wrote:I just happened to take a look at the wiki. Wouldn't you know it? Some elf just added Robert T's thread in the Links section

Hope its useful for others - it is for me.

Robert
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Postby conundrum » Sat Feb 27, 2010 10:53 am

Like EmergDoc I was somewhat surprised that a larger % of posters did not have a written plan. For us there was a tremendous difference between a plan "in our head" and a written plan. Actually writing down the plan forced us to much more fully understand our goals and financial plan. Writing the plan down and reviewing it regularly (quarterly for us) helps find the holes and inconsistencies in our plan and it continues to evolve into a more comprehensive and helpful document. As Dale pointed out, the written IPS is also invaluable in passing on one's financial plan and wishes to family or the surviving spouse. For us the written plan has been and continues to be a very important and dynamic part of our financial planning.

Drum :D
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Postby DaleMaley » Sat Feb 27, 2010 11:37 am

conundrum wrote:Like EmergDoc I was somewhat surprised that a larger % of posters did not have a written plan. For us there was a tremendous difference between a plan "in our head" and a written plan. Actually writing down the plan forced us to much more fully understand our goals and financial plan. Writing the plan down and reviewing it regularly (quarterly for us) helps find the holes and inconsistencies in our plan and it continues to evolve into a more comprehensive and helpful document. As Dale pointed out, the written IPS is also invaluable in passing on one's financial plan and wishes to family or the surviving spouse. For us the written plan has been and continues to be a very important and dynamic part of our financial planning.

Drum :D


My father passed away last August and I helped my mother sort out their financial affairs. My dad had no written IPS. He had cancer and deteriorated rapidly, but my mother bugged him enough he wrote a 1 page crude net worth statement, including the ownership of 3 life insurance policies....about 3 weeks before he passed away.

They had simple wills leaving their estates to each other.

This simple 1-page net worth statement was invaluable to efficiently finding all the assets and insurance policies.

Anything we can leave for our surviving family, including trusts/wills, net worth statements, IPS, makes it a whole lot easier on them for sorting out the financial affairs when we are gone.
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