Author Topic: Investment Policy Statement - 2020 edition  (Read 2717 times)

ctuser1

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Investment Policy Statement - 2020 edition
« on: January 24, 2020, 12:39:18 PM »
With an onslaught of new threads related to market timing, I thought it may be a good idea to:
1. Draw up my own investment policy statement.
2. Request others to post theirs (so that I can shamelessly steal from them as I see fit :-D ).

Ok, here goes for my IPS (in bogleheads format):

Objectives:
  • To reach a retirement account + brokerage + HSA account balance of 2M ASAP (this is my version of lean-FI).
  • To reach a retirement account + brokerage + HSA account balance of 4M in due course of time (this is my version of fat-FI).
Note: the balances considered above do not include anything other than retirement accounts + general purpose brokerage. No home equity, 529 balance, emergency fund, or money specifically earmarked for other purposes is considered in this.

Risk Tolerance:
"High" if traditional definition of risk is used.
I define every day I spend below lean-FI as a "risky day". I invest aggressively after keeping cash emergency fund, so that I can reduce the duration of such a "risky" situation. From that POV, my risk tolerance is low.

Holding Limits
None

Target Allocation:
I have a small amount of global index (<$50k), and a large amount of individual stocks (> $500k - a hangover from my individual stock trading days before 2013).
Most of my new money go into US Equity (~90%), and some in global equity funds(~90%).

This needs to be reconsidered after I cross "lean-FI" as my risk tolerance will change.

Selection Criteria:
VT, VTI, VOO, FXAIX

Review Process:
Tear up the IPS and replace with a new, shiny one at lean-Fi, and then again at fat-FI.

Rebalancing:
I'll think about it after lean-FI.

Now bring on the facepunches and constructive criticisms.
« Last Edit: January 24, 2020, 12:54:03 PM by ctuser1 »

appleshampooid

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Re: Investment Policy Statement - 2020 edition
« Reply #1 on: January 24, 2020, 01:10:41 PM »
Sure, here's mine:

After re-reading it, realized I'm not following it to a T.
  • I've been rebalancing a lot more often. Close to quarterly, after my RSUs vest and I have a big influx of cash. I think I'll codify this in the IPS as I don't consider rebalancing too frequently to be such a bad thing
  • I went ahead and constructed a high-effort allocation with multiple funds in my 401(k) to approximate TSM, since there isn't one :P. But this isn't too bad once I created the spreadsheet, I just update the prices and rebalance between the funds when I rebalance the stock/bond parts.

Buffaloski Boris

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Re: Investment Policy Statement - 2020 edition
« Reply #2 on: January 24, 2020, 05:12:39 PM »
Oh cool.  I've been meaning to write mine down. I'll post it later. 

ysette9

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Re: Investment Policy Statement - 2020 edition
« Reply #3 on: January 24, 2020, 05:45:19 PM »
Posting to follow. I’ll share mine once I am at a computer

Omy

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Re: Investment Policy Statement - 2020 edition
« Reply #4 on: January 24, 2020, 06:04:06 PM »
I need to follow this one...

Villanelle

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Re: Investment Policy Statement - 2020 edition
« Reply #5 on: January 24, 2020, 06:19:01 PM »
Mine is literally just a spreadsheet that has my target allocations, and a note that says I will rebalance through new investments unless any category is off my >5%.  (New money is adjusted early Jan. for main monthly investments, and then periodically as we have too much money building up in the checking account.)


TomTX

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Re: Investment Policy Statement - 2020 edition
« Reply #6 on: January 25, 2020, 01:19:59 PM »
Invest 50% ESGV, 50% VSGX.

Value Roth at 10% more than Traditional retirement accounts.
Value Taxable at 5% more than Traditional retirement accounts.

Rebalance annually around my birthday, or if I notice it's more than 5% off target.

ChpBstrd

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Re: Investment Policy Statement - 2020 edition
« Reply #7 on: January 28, 2020, 09:38:05 AM »
Would it be helpful to include a planned savings rate or savings amount in an IPS? Perhaps as a written commitment to oneself to actually achieve the savings?

Examples:

“Annual lifestyle expenses shall not exceed $45k ($3,750/mo) and all remaining assets will be invested according to the planned AA.”

“For 2020, the plan is to spend $45k and invest $50k, assuming income stays the same.”

“For 2020, I will have a 60% savings rate.”

frugalnacho

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Re: Investment Policy Statement - 2020 edition
« Reply #8 on: January 28, 2020, 09:54:40 AM »
Here is mine.  Haven't given it much thought in past few years, just keep plugging away.

Investment Philosophy:   Minimize expenses wherever possible.  Invest in low cost index funds. Stick to this IPS no matter what.
Investment Objectives:   
     Objective 1: To retire at the age of 40
     Objective 2: Minimize taxes

Asset Allocation:    60% US Stocks
                            40% International Stocks

Funds:    VTSAX – Vanguard Total US Stock Market Fund
              VTIAX – Vanguard Total Int. Stock Market Fund

When not available use closest substitutes.

Rebalancing:    Rebalance annually if deviation is more than +/- 5% from target AA.
                       Rebalance on birthday   

ysette9

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Re: Investment Policy Statement - 2020 edition
« Reply #9 on: January 28, 2020, 12:16:49 PM »
Posting to follow. I’ll share mine once I am at a computer
For what it is worth, here we go.

ctuser1

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Re: Investment Policy Statement - 2020 edition
« Reply #10 on: January 28, 2020, 08:36:05 PM »
Would it be helpful to include a planned savings rate or savings amount in an IPS? Perhaps as a written commitment to oneself to actually achieve the savings?

Examples:

“Annual lifestyle expenses shall not exceed $45k ($3,750/mo) and all remaining assets will be invested according to the planned AA.”

“For 2020, the plan is to spend $45k and invest $50k, assuming income stays the same.”

“For 2020, I will have a 60% savings rate.”

<frustrated venting>
I sometimes feel a tad bit embarrassed that our total expense seem to be stuck between $80k-$90k/ year. This is everything, including mortgage, medical costs/premiums as well as all the "splurging" we do. We have started doing some things to modestly reduce this while still enjoying things. Groceries (thanks to the APowers thread for inspiration on this) and eating out are the first targets.
Let's hope someday I and DW will be just as competent as the others on this board in driving down lifestyle expenses.
</frustrated venting>

My immediate goal is to bring down our total yearly expenses below $75k.

appleshampooid

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Re: Investment Policy Statement - 2020 edition
« Reply #11 on: January 29, 2020, 06:59:37 AM »
Would it be helpful to include a planned savings rate or savings amount in an IPS? Perhaps as a written commitment to oneself to actually achieve the savings?

Examples:

“Annual lifestyle expenses shall not exceed $45k ($3,750/mo) and all remaining assets will be invested according to the planned AA.”

“For 2020, the plan is to spend $45k and invest $50k, assuming income stays the same.”

“For 2020, I will have a 60% savings rate.”

<frustrated venting>
I sometimes feel a tad bit embarrassed that our total expense seem to be stuck between $80k-$90k/ year. This is everything, including mortgage, medical costs/premiums as well as all the "splurging" we do. We have started doing some things to modestly reduce this while still enjoying things. Groceries (thanks to the APowers thread for inspiration on this) and eating out are the first targets.
Let's hope someday I and DW will be just as competent as the others on this board in driving down lifestyle expenses.
</frustrated venting>

My immediate goal is to bring down our total yearly expenses below $75k.
Right there with you buddy. I'm assuming you live in a HCOL area like myself (greater Boston)? Just our mortgage payment (including property taxes) adds up to about $33k per year.

ctuser1

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Re: Investment Policy Statement - 2020 edition
« Reply #12 on: January 29, 2020, 07:19:54 AM »
Right there with you buddy. I'm assuming you live in a HCOL area like myself (greater Boston)? Just our mortgage payment (including property taxes) adds up to about $33k per year.

Yupp, CT. It's an exurb of NYC, so likely just as expensive as greater Boston.

For me the housing costs eat up > $30k/year as well. Mortgage is $20k, taxes+insurance is $7k, and I have to budget a lot (>5k+) for maintenance every year because I purchased this house in a semi-fixer-upper state that I am gradually fixing up.

Even so, we used to run up between $4-$5k every month on credit cards. In 2018, our groceries were ~$12k, eating out was another > $14k, and the 1-click-amazon habit was a few thousand too. We're attacking these.

We started our mustachian quest in the second half of 2019 and hoping 2020 to be the turnaround year. Let's see how it goes!

ysette9

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Re: Investment Policy Statement - 2020 edition
« Reply #13 on: January 29, 2020, 10:57:23 AM »
I’m in that same boat (Bay Area). I spent many hours pouring over our spending and trying to figure out how we spent so much more than what I read in these parts. I eventually gave up as it wasn’t productive, and wasn’t an impediment to us achieving our goals, and we are satisfied with our spending levels. We barely eat out, get a lot of our stuff on Craigslist or Buy Nothing, I cut my husband’s hair, blah blah blah. We also live in an experience some area and as a result are blessed with spectacular salaries that allow us to save a ton while spending a bunch. Peace. It works for us.

Alternatepriorities

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Re: Investment Policy Statement - 2020 edition
« Reply #14 on: January 29, 2020, 11:11:13 AM »
I’ve never had a formal IPS but I’ve mostly stayed true to my core investing values through the ups and downs of 15+ years. I think it might be time to create at IPS though. DW is much less interested in the details than I am and we are trying to help others we know start investing. Either of those is reason enough to have a written plan.

ChpBstrd

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Re: Investment Policy Statement - 2020 edition
« Reply #15 on: January 29, 2020, 11:26:45 AM »
I’m in that same boat (Bay Area). I spent many hours pouring over our spending and trying to figure out how we spent so much more than what I read in these parts. I eventually gave up as it wasn’t productive, and wasn’t an impediment to us achieving our goals, and we are satisfied with our spending levels. We barely eat out, get a lot of our stuff on Craigslist or Buy Nothing, I cut my husband’s hair, blah blah blah. We also live in an experience some area and as a result are blessed with spectacular salaries that allow us to save a ton while spending a bunch. Peace. It works for us.

I’ve done the math a few times to determine whether I could FIRE faster by moving. The results of combining data from salary.com and various COL calculators show that both my spouse and I can save a larger absolute amount per year in our current economic backwater than we could by moving to a HCOL area with a more vibrant economy and higher costs. Moving to Kansas City or Indianapolis would actually accelerate our pace to FIRE.

Putting a savings plan into one’s IPS might force one to take a hard look at the possible lifestyle changes one could make to hit this most important of numbers.

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Re: Investment Policy Statement - 2020 edition
« Reply #16 on: January 29, 2020, 12:11:28 PM »
PTF

ctuser1

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Re: Investment Policy Statement - 2020 edition
« Reply #17 on: January 29, 2020, 12:13:53 PM »
The results of combining data from salary.com and various COL calculators show that both my spouse and I can save a larger absolute amount per year in our current economic backwater than we could by moving to a HCOL area with a more vibrant economy and higher costs. Moving to Kansas City or Indianapolis would actually accelerate our pace to FIRE.

What confuses me is that housing is the *only* thing that is expensive in HCOL areas.

In my HCOL area, I buy milk for $1.30/Gal, eggs for $0.88/dozen, boneless-skinless-chicken for $0.99/lb, and 3 heads of Romaine lettuce for $2. I have spent a lot of time in Cincinnati and Denver (I used to be a consultant and have traveled a lot) - and didn't see anything like these prices in those areas.

I can get prices like these here because there is so much competition among the various chains. e.g. the milk/eggs are at a specific Aldi 5 miles from us, and the chicken is at $0.99 almost every week in one of the 8-9 different supermarkets within a 5 minute driving distance. When I "lived" in Cincinnati - I remember having only one supermarket nearby, and none in a walking distance (I have 3 within 1 mile). The prices for milk/eggs/chicken and other groceries were also much more expensive.

So if you leave aside housing, I have access to low-cost food and other stuff that LCOL residents can only dream of!! And yet, my non-housing expenses are almost $50-60k/year.

That's why I'm convinced that reason for our non-mustachian level of spending must be us, and not circumstances. There must be some way to ratchet it down significantly while not impacting the quality of life!! Additionally, I don't expect that we can save much money by moving to a LCOL area. Whatever we'd save in housing would be eaten up by higher costs on other things.
« Last Edit: January 29, 2020, 09:21:55 PM by ctuser1 »

ysette9

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Re: Investment Policy Statement - 2020 edition
« Reply #18 on: January 29, 2020, 01:56:20 PM »
I’m very curious how our spending will change once we are both FIRE and have time to be more thoughtful and efficient. Two careers and little kids mean that something will always have to go; you can’t do everything.

appleshampooid

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Re: Investment Policy Statement - 2020 edition
« Reply #19 on: January 30, 2020, 07:33:11 AM »
The results of combining data from salary.com and various COL calculators show that both my spouse and I can save a larger absolute amount per year in our current economic backwater than we could by moving to a HCOL area with a more vibrant economy and higher costs. Moving to Kansas City or Indianapolis would actually accelerate our pace to FIRE.

What confuses me is that housing is the *only* thing that is expensive in HCOL areas.

In my HCOL area, I buy milk for $1.30/Gal, eggs for $0.88/dozen, boneless-skinless-chicken for $0.99/lb, and 3 heads of Romaine lettuce for $2. I have spent a lot of time in Cincinnati and Denver (I used to be a consultant and have traveled a lot) - and didn't see anything like these prices in those areas.

I can get prices like these here because there is so much competition among the various chains. e.g. the milk/eggs are at a specific Aldi 5 miles from us, and the chicken is at $0.99 almost every week in one of the 8-9 different supermarkets within a 5 minute driving distance. When I "lived" in Cincinnati - I remember having only one supermarket nearby, and none in a walking distance (I have 3 within 1 mile). The prices for milk/eggs/chicken and other groceries were also much more expensive.

So if you leave aside housing, I have access to low-cost food and other stuff that LCOL residents can only dream of!! And yet, my non-housing expenses are almost $50-60k/year.

That's why I'm convinced that reason for our non-mustachian level of spending must be us, and not circumstances. There must be some way to ratchet it down significantly while not impacting the quality of life!! Additionally, I don't expect that we can save much money by moving to a LCOL area. Whatever we'd save in housing would be eaten up by higher costs on other things.
Those are insane prices, we can't get anything CLOSE to groceries that cheap up here in the North shore area of greater Boston. Admittedly, we don't shop around that much. With a toddler and a 7 month old who WON'T FUCKING SLEEP, mental energy is in short supply around our house. We stick to Market Basket and Costco. On average, MB is the cheapest chain near us, but I'm sure if we had the time/energy to shop deals we could get some stuff cheaper at the other 3 grocery stores within a couple mile radius.
« Last Edit: January 30, 2020, 07:49:05 AM by appleshampooid »

Car Jack

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Re: Investment Policy Statement - 2020 edition
« Reply #20 on: January 30, 2020, 07:44:19 AM »
What confuses me is that housing is the *only* thing that is expensive in HCOL areas.

There are things that you could consider housing-attach.  (how's that for Dilbert-speak!). 

Property taxes....in CT, I don't need to tell you that (I'm in Mass).  Trades people prices.  I know this because we saw a roofer at a neighbor's house from 60 miles away who did good work.  We had him quote a job for us.  It was more than 30% cheaper than any of the local tradespeople quoted.  So he and a helper drove from Warren, Ma (sort of middle of nowhere) to Hopkinton, MA (home to surprise Ferraris driving out of garages pretty often) daily.

But you hit the nail on the head.  I have no more mortgage and guess what?  When I buy gas, I'm not paying more for being in a high cost of living area.  Eggs cost...probably less because we have easy access to Market Basket.  When I buy something from Amazon, I don't pay more than someone in a LCOL area unless they don't have sales tax.  I just looked it up...low cost Texas has the same sales tax as Massachusetts.  And they have a much higher property tax rate.  (so now we can say "Taxas"?

ctuser1

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Re: Investment Policy Statement - 2020 edition
« Reply #21 on: January 30, 2020, 08:14:43 AM »
What confuses me is that housing is the *only* thing that is expensive in HCOL areas.

There are things that you could consider housing-attach.  (how's that for Dilbert-speak!). 

Property taxes....in CT, I don't need to tell you that (I'm in Mass).  Trades people prices.  I know this because we saw a roofer at a neighbor's house from 60 miles away who did good work.  We had him quote a job for us.  It was more than 30% cheaper than any of the local tradespeople quoted.  So he and a helper drove from Warren, Ma (sort of middle of nowhere) to Hopkinton, MA (home to surprise Ferraris driving out of garages pretty often) daily.

Yupp, this is a valid point. I like hiring tradespeople on an hourly basis and have them work over the weekends if possible, so that I can work with them as helper and gain skills. The handyman I hired for the deck-board replacement gave me a fantastic deal because I hire him often and give him a lot of business - $40/hour. Regular rates are more like $75/hour. Electricians are $150/hour. Plumber - same. I just signed a contract to replace oil boiler with gas @ a cost of $10k, of which ~$6k is labor!!

I have friends and former colleagues who live in Texas, and they gasp at these prices!!

Per my housing spreadsheet, the *total* carrying cost for my house is ~$3200/month. This could possibly go down significantly in a low cost area, maybe even < $1500/mo. A 1200 sqft house will cost peanuts there if you can find it, and the cost to do work on it will also be cheap.

That would only account for $25k/year in extra spending, however, even with extreme examples. I get quite envious and embarrassed in equal measure when someone talks about spending levels of $30k/$40k with family/kids - because the extra $25k would still not explain the gap, where I'll consider it an achievement if I can keep ours below $75k for 2020.
« Last Edit: January 30, 2020, 08:38:44 AM by ctuser1 »

ChpBstrd

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Re: Investment Policy Statement - 2020 edition
« Reply #22 on: January 31, 2020, 11:54:05 AM »
What confuses me is that housing is the *only* thing that is expensive in HCOL areas.

There are things that you could consider housing-attach.  (how's that for Dilbert-speak!). 

Property taxes....in CT, I don't need to tell you that (I'm in Mass).  Trades people prices.  I know this because we saw a roofer at a neighbor's house from 60 miles away who did good work.  We had him quote a job for us.  It was more than 30% cheaper than any of the local tradespeople quoted.  So he and a helper drove from Warren, Ma (sort of middle of nowhere) to Hopkinton, MA (home to surprise Ferraris driving out of garages pretty often) daily.

Yupp, this is a valid point. I like hiring tradespeople on an hourly basis and have them work over the weekends if possible, so that I can work with them as helper and gain skills. The handyman I hired for the deck-board replacement gave me a fantastic deal because I hire him often and give him a lot of business - $40/hour. Regular rates are more like $75/hour. Electricians are $150/hour. Plumber - same. I just signed a contract to replace oil boiler with gas @ a cost of $10k, of which ~$6k is labor!!

I have friends and former colleagues who live in Texas, and they gasp at these prices!!

Per my housing spreadsheet, the *total* carrying cost for my house is ~$3200/month. This could possibly go down significantly in a low cost area, maybe even < $1500/mo. A 1200 sqft house will cost peanuts there if you can find it, and the cost to do work on it will also be cheap.

That would only account for $25k/year in extra spending, however, even with extreme examples. I get quite envious and embarrassed in equal measure when someone talks about spending levels of $30k/$40k with family/kids - because the extra $25k would still not explain the gap, where I'll consider it an achievement if I can keep ours below $75k for 2020.


Merchandise will cost about the same, except brick and mortar retailers will have to earn more to cover rent in HCOL areas. The cost of services, however, will go up a lot because service providers usually have to pay high prices to live near enough to provide the services.

I think the question is whether LCOL or HCOL areas offer more opportunities to cut spending well below the averages used in the COL calculators. If the average person in one of the locales, but not the other, is spending wastefully, then the COL calculators might not reflect what a mustachian’s experience would be.

For example, if the average Texan spends $15,000/year on transportation in their big diesel-guzzling custom commuter truck, and you could manage living in Texas spending $5k a year in a compact sedan, then the COL numbers are less relevant to you. Similarly, if the average Hawaiian lives near a beach and you are fine living inland, the numbers are radically different.

It could be that you are capable of spending 20% less in Missouri than the average Missouri resident, and 25% less in Connecticut than the average Connecticut resident. Yet what matters is your savings rate in dollars. If you could save $40k a year in Missouri and $35k a year in Connecticut, it doesn’t matter how much better you’re doing than average.

I think the crazy prices for housing in HCOL areas are hard to mitigate. You can’t count on finding rent pricing errors, and you can’t go smaller and smaller for long.

It would be hard for anyone in a HCOL area to save more in dollars than someone in a LCOL area living the exact same lifestyle (square footage, roommates, restaurants, car, distance to jobs). The strategy of living small in a LCOL area is probably impossible to beat, in terms of facilitating FIRE.


ysette9

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Re: Investment Policy Statement - 2020 edition
« Reply #23 on: January 31, 2020, 12:23:37 PM »
This isn’t true for everyone (doctors for example), but in industries like tech and finance the HCOL areas have much more robust job markets and significantly higher salaries. So my path to FI is faster in one of the most expensive areas ever because our careers here are much stronger than they would have been, on average, had we chosen cheaper areas to build our lives.

Buffaloski Boris

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Re: Investment Policy Statement - 2020 edition
« Reply #24 on: April 30, 2020, 02:38:39 PM »
Investment Policy Statement 2020

Quotes:

“It takes less courage to criticize the actions of others than it does to stand by your own” -Atilla the Hun-

“To make money in the markets you have to think independently and be humble” -Ray Dalio-

“Freedom in capitalist countries exists only for those who possess money and who consequently hold power.” -Nikita Kruschev- 

"WINNING!!" -Charlie Sheen-

Objectives:

To possess freedom; to be able to live on our own terms. 
To maintain sufficient funds to cover retirement for both self and DW.
To pass along wealth and skills so that our children and our children’s children and our children’s children’s children will have freedom.
To minimize life expenses as well as maximize income; a dollar saved is more valuable than a dollar earned.
To diversify well across asset classes and markets. 

Risk tolerance:

High but with the requirement that risk be adequately compensated.  I do not believe that US securities markets provide adequate risk compensation at this time. As a result I will continue to keep a large portion in low risk assets such as cash and non-US assets until that changes.   

Holdings limits:

-US equities: no more than 25% of net worth unless a large drop in markets occurs.
- US large cap, cap weighted index funds to be avoided when possible due to concentration in few stocks. 
-Individual stocks: no more than 1% of net worth in any one stock.
-Individual countries outside of US: no more than 10% of net worth.

Target allocation:

-by end of 2020; to be 60% in equities for securities based accounts using gradual purchases.   
-To use 1% of net worth on cost savings/time savings assets/measures.  E.g home insulation, energy savings, tools, etc. 

Selection criteria:
 
-Consideration is given to counterintuitive strategies as well as choices and strategies of successful investors whom I respect.     
-Expense ratios will be noted, but not become an obsession.
-International equities exposure to exceed domestic so long as there is a significant spread in respective PE and CAPE ratios.

Review process:

-Look at policy statement monthly, but remember that it’s a guideline and subject to change.

Rebalancing:

-Irrelevant until I get to my target equity percentage at the end of 2020. 

Investment order

1.  401ks up to match
2.  529 plans up to state deduction threshold.
3a.  401ks.
3b.  Roth IRAs
4.  Taxable savings pending better opportunities.

ETA: 5-24-20 Investment order and quote from Charlie Sheen.   
ETA 8-11-20 deleted US equities investment trigger.  I want to rethink it.  Also increased end of year target for equities to be 60% vice 50%. 
« Last Edit: August 12, 2020, 09:30:45 AM by Buffaloski Boris »

Villanelle

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Re: Investment Policy Statement - 2020 edition
« Reply #25 on: April 30, 2020, 06:49:40 PM »
Invest all available $ in allocation according to allocation spreadsheet.  [Very Fancy spreadsheet is set up with my desired allocation in major categories and sub-catagories. Info on the various funds I'm in is also input, so I just tell it I have $xxx in VAAAA and $yyy on VBBBB, and it calculates how much that means I have in International Emerging Markets, etc., and then tells me how much--as a % and a $ amount-- that is off from my target allocation] Check on need for rebalancing 2x/yr.  Adjust future buys as needed, or sell if any category is off by more than about 5%. 

Max Roth TSP first.  (At the beginning of the year and as part of the rebalance check, set contribution and allocation for the year.)
Then Roth IRA.
Then taxable. 

That's pretty much it. 

waltworks

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Re: Investment Policy Statement - 2020 edition
« Reply #26 on: April 30, 2020, 07:17:53 PM »
-Invest $1500/week into 30% international/VTIAX and 70% domestic/VSTAX stocks
-Pay zero attention to value of holdings because we're in for the VERY long haul/generational wealth
-Continue part time work in order to fund fostering/adopting and making kids lives more awesome
-Maintain emergency fund at $100k/3 years in CDs because lots of kids=big EF
-Go for mountain bike rides, ski trips, and outings to the tire swing w/kids as often as possible. That means every day.

-W
« Last Edit: April 30, 2020, 08:13:56 PM by waltworks »

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Re: Investment Policy Statement - 2020 edition
« Reply #27 on: May 25, 2020, 08:40:00 AM »
-Invest $1500/week into 30% international/VTIAX and 70% domestic/VSTAX stocks
-Pay zero attention to value of holdings because we're in for the VERY long haul/generational wealth
-Continue part time work in order to fund fostering/adopting and making kids lives more awesome
-Maintain emergency fund at $100k/3 years in CDs because lots of kids=big EF
-Go for mountain bike rides, ski trips, and outings to the tire swing w/kids as often as possible. That means every day.

-W

I like the third bullet.  Kids are a form of wealth and used to be the equivalent of social security. 

DadJokes

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Re: Investment Policy Statement - 2020 edition
« Reply #28 on: May 26, 2020, 11:32:20 AM »
I don't know about a policy statement, but I do like establishing rules to follow. I came up with the following:

1. Maintain a minimum savings rate of 50% (invested money + cash savings)/(gross income - taxes)
2. Get 401(k) match
3. Max 457(b) & HSA
4. Keep at least $10,000 available in bank accounts
5. 100% equities until 2 years before expected FI date, then reassess
6. Maintain 75/25 pre-tax to Roth ratio (allowing for variance of 5%)
7. Apply 75% of raises or windfalls to savings

#7 is going to be the most challenging one to stay vigilant on. Fighting lifestyle inflation is an ongoing battle. The other rules are easier to automate.

Car Jack

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Re: Investment Policy Statement - 2020 edition
« Reply #29 on: May 26, 2020, 12:59:48 PM »
I don't actually have a written IPS and have no desire to formally write one.  (gasp)

My investment philosophy changes with time and learning.  I'm near retirement (and have been FI for a long time). 

Rules I follow.
Rebalance on my birthday or when a stock or bond total is 5% out of whack.
Tax Loss Harvest with obvious big wins only.
AA is a set 50/50.  International is left to float.  This came about because I read and watched more and more Jack Bogle and agree with him at this point that there is no company that exists that doesn't have foreign revenue.  I do still track it.  When I started, I think my int was 30% of stock.  Now, 19.5%.
I don't market time at all.

For future strategy to reduce dividends (essentially income you can't avoid), buy BRK/b instead of a stock index fund in taxable.  I am currently watching this and considering a change.  I've not made any decision yet, so nothing is being done.

Overall, buy the haystack, don't look for a needle.
Don't do something, just stand there.
Living below our means has always been our home base anyways.  Both the wife and I paid our own ways through college, so we have no love of over spending. 

solon

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Re: Investment Policy Statement - 2020 edition
« Reply #30 on: May 26, 2020, 01:09:31 PM »
I don't actually have a written IPS and have no desire to formally write one.  (gasp)

My investment philosophy changes with time and learning.  I'm near retirement (and have been FI for a long time). 

Rules I follow.
Rebalance on my birthday or when a stock or bond total is 5% out of whack.
Tax Loss Harvest with obvious big wins only.
AA is a set 50/50.  International is left to float.  This came about because I read and watched more and more Jack Bogle and agree with him at this point that there is no company that exists that doesn't have foreign revenue.  I do still track it.  When I started, I think my int was 30% of stock.  Now, 19.5%.
I don't market time at all.

For future strategy to reduce dividends (essentially income you can't avoid), buy BRK/b instead of a stock index fund in taxable.  I am currently watching this and considering a change.  I've not made any decision yet, so nothing is being done.

Overall, buy the haystack, don't look for a needle.
Don't do something, just stand there.
Living below our means has always been our home base anyways.  Both the wife and I paid our own ways through college, so we have no love of over spending.

This is kinda funny. You just wrote a fantastic IPS.

Buffaloski Boris

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Re: Investment Policy Statement - 2020 edition
« Reply #31 on: May 26, 2020, 01:52:41 PM »
I don't actually have a written IPS and have no desire to formally write one.  (gasp)

My investment philosophy changes with time and learning.  I'm near retirement (and have been FI for a long time). 

Rules I follow.
Rebalance on my birthday or when a stock or bond total is 5% out of whack.
Tax Loss Harvest with obvious big wins only.
AA is a set 50/50.  International is left to float.  This came about because I read and watched more and more Jack Bogle and agree with him at this point that there is no company that exists that doesn't have foreign revenue.  I do still track it.  When I started, I think my int was 30% of stock.  Now, 19.5%.
I don't market time at all.

For future strategy to reduce dividends (essentially income you can't avoid), buy BRK/b instead of a stock index fund in taxable.  I am currently watching this and considering a change.  I've not made any decision yet, so nothing is being done.

Overall, buy the haystack, don't look for a needle.
Don't do something, just stand there.
Living below our means has always been our home base anyways.  Both the wife and I paid our own ways through college, so we have no love of over spending.
That wasn’t an IPS?  I like your not-an-IPS.

Heroes821

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Re: Investment Policy Statement - 2020 edition
« Reply #32 on: June 03, 2020, 02:33:52 PM »
Wow these look so much more detailed than mine. 

I keep an email chain when life events alter things, but the basics are:

60% VTSAX (or equivalent i.e. 401k might only offer S&P 500)
30% VTIAX
10% Bonds.

Rebalance Annually.

Buffaloski Boris

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Re: Investment Policy Statement - 2020 edition
« Reply #33 on: August 12, 2020, 09:26:30 AM »
Decided to bump this one up.  Having an IPS is really important in my opinion.As is reading it periodically.