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
149
53%
 
Total votes : 281

Postby tc101 » Sat Feb 27, 2010 10:54 am

I don't think this poll is meaningful. I noticed that I enthusiastically participated because I was proud of myself for having a written plan. I think that if I had not had the written plan I would have been less likely to participate. I think this may be a common emotional response to the poll and may skew the results.
. | The most important thing you should know about me is that I am not an expert.
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Postby DRiP Guy » Sat Feb 27, 2010 1:12 pm

tc101 wrote:I don't think this poll is meaningful. I noticed that I enthusiastically participated because I was proud of myself for having a written plan. I think that if I had not had the written plan I would have been less likely to participate. I think this may be a common emotional response to the poll and may skew the results.


If so (and I am not saying you are wrong, the bias you predict seems reasonable) then that does not speak highly for the number of people doing this simple, but IMHO very useful task, as it's about 50/50 in responses right now.

:shock:
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Postby DaleMaley » Sat Feb 27, 2010 1:56 pm

DRiP Guy wrote:
tc101 wrote:I don't think this poll is meaningful. I noticed that I enthusiastically participated because I was proud of myself for having a written plan. I think that if I had not had the written plan I would have been less likely to participate. I think this may be a common emotional response to the poll and may skew the results.


If so (and I am not saying you are wrong, the bias you predict seems reasonable) then that does not speak highly for the number of people doing this simple, but IMHO very useful task, as it's about 50/50 in responses right now.

:shock:


I can't cite specific studies at the moment........but I think there has been plenty of research done showing the probability of achieving a goal goes up dramatically if you are forced to write out the goal versus not having a written goal. I think this research was the whole reason that corporate america went to MBO (Management by Objective) and brought us the dreaded annual objective and results reviews.

I am also surprised that only 50% of Bogleheads have used this simple fact about human nature (written goals increase odds of success) to improve their chance of achieving their goals.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett
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Re: POLL: Do you have a written investment plan?

Postby bayview » Thu May 02, 2013 12:35 pm

I hope I will be excused for bumping this thread. I found the link on the IPS wiki: http://www.bogleheads.org/wiki/IPS

I have a written plan in the form of musings on a spreadsheet explaining to my future self (and anyone else bored enough to look) why I decided what I did. (There are also random scribbles on post-it notes, and old check register, and a steno pad, but I think those will be pretty ephemeral. :D )

It might be fine for long-term investors to carry their plans around in their heads, but those of us who are still learning and thinking things through are apt to bounce all over the place for a while.

I also agree with the research showing that making the effort to write something down makes it more likely that the plan will be adhered to.
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Re: POLL: Do you have a written investment plan?

Postby Dulocracy » Thu May 02, 2013 5:13 pm

My investment plan has general goals set for the year in advance each year. It also has monthly goals. For example, I currently am paying a set amount monthly toward my car note. That is a monthly goal. I had a yearly goal of putting $600 in a particular fund by the year's end. I put in $100 in January. I just put in $500 when I saw that the fund had about a 5% dip. I was not trying to time the market, but I saw an opportunity. Those are my action items.

I also have a written Asset Allocation. I do not forget it; I do not stray from it. I do not care whether the funds are tanking or going gangbusters. I stick to my written plan.

I find that having set monthly goals will keep me on track with those things that I need to make sure get done. Having general yearly goals will allow me to move money as it becomes available. Although the goals are yearly, it is a set goal. I have the illusion of actively participating in what goes where, although that was already predetermined.

Finally, I have a net worth statement that I update monthly to track my goals and the results of my goals. I am a part of a group that meets monthly to review members' situations and to hold each other accountable. The first part of the meeting is accountability (we go around the table discussing whether or not we did what we said we would do for the month. This typically includes discussing specific goals from the last month, as well as setting specific goals for the next month.) The second part of the meeting focuses on one member. That member will present a budget, net worth statement, and asset allocation. We will focus on that member for that portion of the meeting for more in-depth analysis. The group has a rule that only one person per family may be there (so as to avoid that conflict), and a strict rule of confidentiality (so our assets are not disclosed). We will not grow to over 6. Having that meeting makes it such that I have no choice but to have a written plan. (Which is a good thing.)
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: POLL: Do you have a written investment plan?

Postby JPH » Thu May 02, 2013 5:44 pm

Yes, but I think it is more complex than it needs to be.
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Re: POLL: Do you have a written investment plan?

Postby LadyGeek » Thu May 02, 2013 6:54 pm

Then go ahead and simplify it. The bottom part of the wiki article shows how: Investment Policy Statement (Investing plan)

The important point is that you have a clear understanding of what to do.
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: POLL: Do you have a written investment plan?

Postby Leif » Thu May 02, 2013 7:21 pm

Mine is just spreadsheet entries. What percentage is allocated to each asset class, when to rebalance, glide path plan.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore
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Re: POLL: Do you have a written investment plan?

Postby mjsmithz » Thu May 02, 2013 9:35 pm

just 2 or 3 months ago i decided to take over my retirement investing. after reading books (several of which happened to be on the recommended list here) i noticed several of them suggested a written investment policy did a google search found the wiki and used a couple of them and presented it to the wife for her approval.
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Re: POLL: Do you have a written investment plan?

Postby Default User BR » Fri May 03, 2013 3:39 pm

Leif Eriksen wrote:Mine is just spreadsheet entries. What percentage is allocated to each asset class, when to rebalance, glide path plan.

Pretty much the same for me, although mine has a formula to examine the asset classes and do a 5/25 analysis. It then puts up color-code indicators INCREASE, IN RANGE, REDUCE so I don't have to think too hard.


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Re: POLL: Do you have a written investment plan?

Postby Dandy » Fri May 03, 2013 4:15 pm

I have a plan. e.g. allocation now and what I want at age 70 (5 yrs). I have a spreadsheet that I update a few times a year which shows the target allocation for each type of investment and I compare it to my actual. I am keen on diversification, low cost and don't take excessive risk. I don't have a written plan that goes into detail of what my investment philosophy is and why I have such an allocation and my rebalancing plan etc.

I treat it like I'm taking a trip I know where I want to go and a rough idea of the route and timeframe. I check my progress and consider some alternate routes (e.g. more CDs than intermediate bonds) but don't get too far off course (e.g I don't eliminiate intermediate bonds). I have a nice allocation to the older TIPS fund will consider the new one when the front end charge is eliminated. Will consider the International bond fund also. Why, because my general approach diversification/low cost/low risk. I guess if I had a formal written plan I would have to rewrite it to often.

I am a conservative investor and am not tempted my media to be an active market timer or get into trading - I rebalance once or twice a year - usually to my equity allocation near the goal.

My wife wouldn't be able to continue the journey she will need to be in a Life Strategy or Target Date fund - I may go to that down the road myself.
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Re: POLL: Do you have a written investment plan?

Postby Boglenaut » Fri May 03, 2013 4:25 pm

Yes. It's an excel spreadsheet.
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Re: POLL: Do you have a written investment plan?

Postby mickeyd » Fri May 03, 2013 6:29 pm

If by investment plan you mean an IPS with an AA. Yes. I wrote it during a 6 month period making copious changes during that window less than 10 years ago. I have made no changes since it's completion and implementation. It has guided me quite well over that last decade. I expect it will continue to guide me for at least the next decade.
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Re: POLL: Do you have a written investment plan?

Postby abuss368 » Fri May 03, 2013 7:58 pm

Default User BR wrote:
Leif Eriksen wrote:Mine is just spreadsheet entries. What percentage is allocated to each asset class, when to rebalance, glide path plan.

Pretty much the same for me, although mine has a formula to examine the asset classes and do a 5/25 analysis. It then puts up color-code indicators INCREASE, IN RANGE, REDUCE so I don't have to think too hard.


Brian


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Re: POLL: Do you have a written investment plan?

Postby optimus » Sat May 04, 2013 6:06 pm

I don't have one but after reading what everyone had to say I am going to write up a simple one page plan.
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Re: POLL: Do you have a written investment plan?

Postby AllySK » Sun May 05, 2013 10:20 am

This thread has inspired me to write down my IPS. I have an Excel spreadsheet where I track my balance sheet, asset allocation, budget, etc., but I've never formally written down my IPS. I've had it floating around in my head for a little while, but actually writing it down has been fun and helpful in making me refine my goals. Here it is. Comments or suggestions are welcome. :) (A little background: I'm 23, discovered Bogleheads about 6 months ago and it's been transformative for me - so thank you all.)

---

Investment Policy Statement
5/5/13

Financial accounts: (as of 5/5/13)
Savings Accounts
XX

Retirement Accounts
401k @ company: XX
Roth 401k @ company: XX
Roth IRA @ Fidelity: XX

New Contributions
401k: 17,500 or limit
Roth IRA: 5,500 or limit (back door if necessary)
Taxable: at least XX

Investment Philosophy:
Long term buy and hold. Use total market index funds whenever possible. Avoid trying to beat the market or time the market. Keep expense ratios as low as possible.

Always have at least a 6 month emergency fund. Avoid lifestyle inflation. Current (2013) spending is about $XX/yr - try to keep as close to that as possible. Save at least 50% of net income for as long as possible.

Equities: ~30% international, a small tilt to SCV (or ext. market) is fine
Bonds: Roughly (Age - 10) to (Age - 5)
Rebalance at least annually, preferably with new contributions

Investment Objectives:
1) Retire by age 55 in 2044 with at least $X mil in today's (2013) dollars
-XX/year income @ 2.5% SWR (consider taxes, medical costs...)
-this is roughly 2x current (2013) expenses
-before age 59.5, live off taxable accounts
-after retired, convert TIRA to Roth up to 10% or 15% bracket each year
(This goal is subject to change if I get married, have kids, etc. I'm not too attached to it, but it's a target to shoot for right now.)

2) Down payment on a house in 5-10 years
-must put at least 20% down to avoid PMI
-house should cost no more than 3x gross income
-a $300k home will require a 60k down payment
-ideally save for down payment only after maxing out retirement accounts
-buy as little house as needed
-location is important (close to work, grocery stores, etc)
-consider 15 year mortgage

Asset Allocation:
Initial Allocation (age 23):
Bonds: 15%
Total US Stock Market: 50%
US Small Cap Value or Ext. Market: 10%
Total Int'l Stock Market: 25%

By age 25, have 20% in bonds. Continue with Age - 5.
Bonds: 20%
US TSM: 46%
US Ext Mkt: 10%
Int'l Stock: 24%

By retirement, should have at least 50% in bonds.

Monitoring and Rebalancing:
Monitor monthly, quarterly, or yearly.
Rebalance if 5 pct points or 25% away from target ("5/25").
Rebalance preferably with new contributions.

Taxable Investing:
I will only start taxable investing for retirement after I have maxed out tax-advantaged accounts, and saved for short-medium term goals (such as a house down payment).

I will start buying I-bonds @ Treasury Direct ($10k/yr) at age 30. I-bonds can be tax deferred for 30 years, so they will start maturing when I'm 60. I-bonds can be redeemed after 1 year. If they are redeemed before 5 years, there is a penalty of last 3 months' interest. Thus, after one year, they can be part of my emergency fund. I could count them as part of my bond allocation too.

I will consider EE bonds (also $10k/yr max). These double in value after 20 years.

Consider:
http://www.bogleheads.org/wiki/Principl ... _Placement
http://www.bogleheads.org/wiki/Placing_ ... ed_Account

When I have taxable accounts for retirement, I will allocate them as follows:

Taxable:
Int'l Stock (for foreign tax credit)
TSM

Roth:
SCV/Ext. Mkt
TSM

Tax Deferred:
Bonds
TSM

I will consider holding my taxable accounts at Vanguard and tax loss harvesting using the following pairs: (to be researched more thoroughly when the time comes)

-Total Int'l (FTSE Global All Cap ex-US)
-Vanguard FTSE All-World ex-US Index Fund (excl small cap)

-TSM
-80% S&P500 / 20% Ext Mkt

Reasons for changing IPS:
-Life change
-Goal change
-Do not change IPS based on short term market performance.
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Re: POLL: Do you have a written investment plan?

Postby bayview » Sun May 05, 2013 11:29 am

AllySK, very nice!!

I'm pretty sure that at your age, I was still occasionally sweating to cover the rent check. :oops:
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Re: POLL: Do you have a written investment plan?

Postby mickeyd » Sun May 05, 2013 3:15 pm

(A little background: I'm 23, discovered Bogleheads about 6 months ago and it's been transformative for me - so thank you all.)


AllySK... Nice Plan~easy to understand and easy to follow. You will be a wealthy Boglehead in the future. Don't ever forget that final line in your plan.
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