Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Do you have a Personal Investment Policy Statement?
Old 09-22-2010, 01:33 AM   #1
Thinks s/he gets paid by the post
kyounge1956's Avatar
 
Join Date: Sep 2008
Posts: 2,171
Do you have a Personal Investment Policy Statement?

I've been waiting about a month for The only guide you'll ever need for the Right Financial Plan to come in to the library. It finally got here yesterday, but is not what I was expecting. I thought it would be a guide to how to write your personal investment policy, but it's more a guide to how to carry out the policy once you have one. The chapter on how to write the statement is very brief and general and I was hoping for some much more specific guidance in that area, like worksheets or questionnaires. I'd like to develop such a policy statement, but I have no idea where to start. Do you have a Personal Investment Policy, and if so how did you develop it? Can you suggest a book or website that will help?
__________________

__________________
kyounge1956 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-22-2010, 02:43 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,576
Yes we do. I initially developed it as a road map to get us to retirement - starting with our then financial position, an estimate for what we would need to have a sustainable retirement and estimates of what is needed in terms of savings, time and return on investments to bridge the gap. It includes a retirement budget (frequently revised), a couple of pages on what we intend to do with ourselves and thoughts on what we will do if it looks like we will come up financially short at some stage after we retire.

I found the parts of "Strategy for the Wealthy Family" by Mark Haynes Daniell to be useful (even if the book was aimed at families with a lot more money than we will ever have).
__________________

__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 09-22-2010, 06:48 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,626
As with all questions like this, start with a search of the Bogleheads' Wiki:
Investment Policy Statement - Bogleheads

Make sure you put in some specific rules about tax-loss harvesting and about rebalancing.
__________________
LOL! is offline   Reply With Quote
Old 09-22-2010, 10:12 AM   #4
Thinks s/he gets paid by the post
kyounge1956's Avatar
 
Join Date: Sep 2008
Posts: 2,171
Quote:
Originally Posted by LOL! View Post
As with all questions like this, start with a search of the Bogleheads' Wiki:
Investment Policy Statement - Bogleheads

Make sure you put in some specific rules about tax-loss harvesting and about rebalancing.
Thanks for that excellent suggestion. I searched the Bogleheads forum but couldn't find anything quickly, but I am so unused to the availability of a Wiki that I usually forget to look there. I think I will be able to make a good start with that info.

I do need to put in rebalancing rules, but don't need to consider tax loss harvesting because I don't have a taxable investment account. My whole portfolio is in a 457 plan and a Roth IRA.
__________________
kyounge1956 is offline   Reply With Quote
Old 09-22-2010, 11:12 AM   #5
Thinks s/he gets paid by the post
Bimmerbill's Avatar
 
Join Date: Jan 2006
Posts: 1,631
Interesting, I don't think I've ever seen this before. I'll have to read up on it.
__________________
Bimmerbill is offline   Reply With Quote
Old 09-22-2010, 11:39 AM   #6
Moderator Emeritus
CuppaJoe's Avatar
 
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,866
Thanks, LOL! The links save nicely to my "read offline" app.
__________________
CuppaJoe is offline   Reply With Quote
Old 09-22-2010, 11:47 AM   #7
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Quote:
Originally Posted by kyounge1956 View Post
I do need to put in rebalancing rules...
The trick is to make them as simple as possible and as mechanical (unemotional) as possible. Otherwise you'll end up endlessly debating whether today is the day or tomorrow would be better.

One issue that rebalancing doesn't address is "What if everything goes down at once?" Spouse and I were taken aback with this during the 2008 recession.

Nobody complains about "What if everything goes up at once?", but it's another indication that you're not adequately diversified.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 09-22-2010, 06:07 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,626
I would like to propose that if you want to realize the tax loss in the year 2010, then the best day to do so is when the loss is the largest and the cost of the replacement position (similar, but not substantially identical) is concomitantly at the lowest.

This best day is also not a bad day to rebalance from bonds to stocks. It is not the best day to rebalance from stocks to bonds though.

Thus I propose that a so-called large one-day drop in the market indices is near the day to tax-loss harvest. That is, if your Small Cap Value fund drops 4% in one day, then that's the day to sell it and buy another Small Cap Value fund in a tax-loss harvesting move. Or if there is a large one-day drop in your emerging markets EEM fund, that's the day to sell it and buy the emerging markets VWO fund.

So the "when" to think about rebalancing and TLHing is fairly obvious and unemotional to me.

Here's a specific example:

On May 20th, EEM had a one-day drop from the previous day of 5% to close at 36.17 while the 52-week low for EEM is 35.21 probably reached intraday on May 25th. There were not too many days that EEM traded near 36 in the last year
__________________

__________________
LOL! is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Investment Return graph on Vanguard Personal site... thefed FIRE and Money 7 07-26-2010 08:57 PM
Personal investment returns: first half of 2010 soupcxan FIRE and Money 35 07-02-2010 09:31 AM
Article: Withdrawal Policy Statement LOL! FIRE and Money 52 06-12-2010 09:37 AM
Personal Income Statement 45th Birthday FIRE and Money 9 01-22-2009 07:25 PM
Andy - Progress on Privacy Policy/Statement chinaco Forum Admin 2 12-01-2007 04:57 PM

 

 
All times are GMT -6. The time now is 12:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.