Goal: Review your investments and goals.
Reviewing your investments will help you organize your investments, integrate a strategy and meet your financial goals.
How do I organize my investments?
You can organize your investments by creating an investment policy statement. An investment policy statement will help you transition from being an investment collector to becoming an organized investor. Being organized will keep you focused on the big picture rather than being concerned about short term market changes.
What is an investment policy statement?
The investment policy statement (IPS) is a roadmap to managing your investment portfolio. You’ll assemble an overview of your goals, objectives, asset allocation, risk tolerance and investment philosophy.
How do I create an investment policy statement?
Following is an overview of the seven steps to creating your investment policy statement (see next steps for information on downloading the in-depth guide to learn how to create your own investment policy statement).
- Define your objectives (goals). Identify your short-term and long-term financial goals such as paying off debt, saving for college, starting a business, saving for retirement, retirement income distribution and leaving an inheritance.
- Outline your investment strategy (philosophy). Set clear principles for your investment policy statement. This will keep you on course with your personal investment philosophy.
- Identify your risk tolerance. Investing involves a relationship between risk and reward. All investments include some level of risk. It’s important to determine your level of risk tolerance.
- Set your asset allocation limits. Asset allocation is about how of much of your money is invested in a specific category of investment (stocks, bonds, cash and other asset classes). Diversifying your assets will lower the volatility of your investment portfolio.
- Investment selection criteria. Determine the criteria you will apply to each investment. Apply this criteria test to every investment. This will help you to stay focused on your longer-term strategy.
- Document your current investments. It is important to have all of your investment information in one place. You can quickly review investments and make adjustments to fit your investment policy statement.
- Review process and rebalancing. During your review process, assess whether your investments meet your IPS criteria. Adjust your investments as necessary.
How often should I review my investment portfolio?
It’s important to set a schedule to review your investments. Review your investments yearly. Major life changes should include a quick review of your investments. Those events include birth, death, marriage, divorce, occupation change or graduation.
Create an investment policy statement. Access the Get Ready Toolkit and download the Investment Policy Statement Template (worksheet) along with worksheets to organize all of your investments including a retirement tracker (here).
The Get Ready Toolkit also includes a subscription to the Get Ready Newsletter which follows the Get Ready Financial Calendar to help you stay financially prepared.
Pick up a copy of Get Ready: A Step-By-Step Planner for Maintaining Your Financial First Aid kit to guide you through organizing your financial documents. Pick up a copy on Amazon (here), purchase a digital copy (here) or learn more (here).
Note: Please be advised that I am not an investment advisor, and this is not investment advice. Please consult a qualified investment advisor when applicable.