POLL: Do you have a written investment plan?
POLL: Do you have a written investment plan?
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?
Just want to know:
Do you have a written investment plan?
- simplesimon
- Posts: 4578
- Joined: Mon Feb 25, 2008 7:53 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.
Link to Asking Portfolio Questions
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.
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.
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.
Sam
Sam
Have you seen the suggestions in the Wiki? Lots of good info here. Please see Investment Policy Statement on the Bogleheads Wiki.Can anyone offer elements that you think are essential for a good plan?
Link to Asking Portfolio Questions
Doh.retiredjg wrote:Have you seen the suggestions in the Wiki? Lots of good info here. Please see Investment Policy Statement on the Bogleheads Wiki.Can anyone offer elements that you think are essential for a good plan?
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)
- Opponent Process
- Posts: 5157
- Joined: Tue Sep 18, 2007 9:19 pm
YES!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)".
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.
- Taylor Larimore
- Posts: 32842
- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
Written plan?
No. We have a very simple investment plan which my wife and I understand.Do you have a written investment plan?
"Simplicity is the master key to financial success." -- Jack Bogle
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- Posts: 52
- Joined: Wed Feb 24, 2010 11:41 am
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.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)".
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!!
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:
Drum :lol:
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.
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.
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.
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 6:19 pm, edited 1 time in total.
Part-Owner of Texas |
|
“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
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%
Investment Goals
Bonds 55.00%
Equities 30.00%
Real Estate 3.30%
Cash 5%
Annuity 3.40%
Insurance 3.30%
Total 100.00%
- speedbump101
- Posts: 999
- Joined: Thu Oct 18, 2007 10:54 pm
- Location: Alberta Canada
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...
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
Excellent test...and you were not charged a dime for the event.speedbump101 wrote: This IPS did not change one iota during the 2008 / 2009 meltdown.
Part-Owner of Texas |
|
“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
.
=> The short version....
=> The long version (or thereabouts)
=> The short version....
=> 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
- speedbump101
- Posts: 999
- Joined: Thu Oct 18, 2007 10:54 pm
- Location: Alberta Canada
Not quite sure what you mean by this?mickeyd wrote:Excellent test...and you were not charged a dime for the event.speedbump101 wrote: This IPS did not change one iota during the 2008 / 2009 meltdown.
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...
"Man is not a rational animal, he is a rationalizing animal" -Robert A. Heinlein
Re: POLL: 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.Do you have a written investment plan?
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."
Thanks Robert -- don't hide your light under a bushel -- IMHO, everyone should go look at this post:Robert T wrote:=> The short version....
=> 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!
Plan includes a record of decisions
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.
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.DRiP Guy wrote:I shoulda known that the heavy lifting had already been done by the excellent Boglehead Wiki-elves!
Please see Investment Policy Statement on the Bogleheads Wiki.
LadyGeek worte:
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.
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.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.
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.
You received invaluable experience about your AA (that it was good), and no one charged you a fee to obtain that experience.Not quite sure what you mean by this?
Part-Owner of Texas |
|
“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
I answered No, even though I think that
But no, I do not have "written investment plan." What do I need it for?
- * 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
But no, I do not have "written investment plan." What do I need it for?
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.
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.
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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- Joined: Wed Nov 26, 2008 7:52 am
- Location: Hong Kong
- Contact:
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.
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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- Posts: 3181
- Joined: Mon Feb 26, 2007 4:33 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.
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
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
- Sunny Sarkar
- Posts: 2443
- Joined: Fri Mar 02, 2007 12:02 am
- Location: Flower Mound, TX
- Contact:
I found mine in this article... http://www.forbes.com/2009/12/18/mutual ... -dogu.html
heh hehFamilyMan wrote:I said no because that was a 2010 New Year's resolution that hasn't been done yet :roll:
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...
- White Coat Investor
- Posts: 17409
- Joined: Fri Mar 02, 2007 8:11 pm
- Location: Greatest Snow On Earth
Agree with above in that the process is what counts, but notarized?speedbump101 wrote:Absolutely... It was written with professional help, notarized, and resides with our other legal and estate documents.
For meIt 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.the process of creating this far outstrips the physical document itself.
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...
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.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
- speedbump101
- Posts: 999
- Joined: Thu Oct 18, 2007 10:54 pm
- Location: Alberta Canada
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.EmergDoc wrote:Agree with above in that the process is what counts, but notarized?speedbump101 wrote:Absolutely... It was written with professional help, notarized, and resides with our other legal and estate documents.
For meIt 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.the process of creating this far outstrips the physical document itself.
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...
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.
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
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.
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.
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
Drum
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.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
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.
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