Investment Policy Statement

Got this idea from the below link and it raised many questions
http://somerandomguyonline.com/helicopter-investor/

Create an investment policy statement

An investment policy statement (IPS) is a statement or document that outlines your general investment goals and objectives. It also establishes your specific investment strategy, risk tolerance, asset allocation, and investment philosophy. You can also include a section on how often you want to monitor your portfolio and when to rebalance it. Write your IPS down. Keep it handy so you can refer to it when needed.

Investment Policy Statement

I already have one but not as specific as it should be.

Original: To have 25 times my last 12 months' expenses and not touch the savings at any cost unless medical emergency or job loss.

My investment strategy is simple, to put money in dynamic PE FOF after-tax investing.

Risk tolerance is low so invested in a dynamic fund that invests in both debt and equity.

Asset Allocation is simple too as the fund does it every month based on the PE ratio.

The investment philosophy is to take less risk and ride the equity and debt markets at the same time and long enough to reach my goal to have 25 times my last 12 months' expenses (I should be tracking my expenses every month without fail).

21-07-18:

New statement:

Original ambition remains the same but changes in asset allocation. PE fund is charging me 1.5% and if I am FI a few years from now and plan to withdraw 4% the expenses alone will consume 37.5% of my withdrawal. This is a high-cost option, I think I am making excuses for not planning to work and being lazy and planning to retire in 5 years, but caring for my mother the financial burden makes me think I should work as long as I can and build wealth for myself and my kid.

My investment strategy is simple, to put money in Nifty 100 index funds after-tax investing.

Risk tolerance is high as I am planning to be in the workforce as long as I can, even if disasters occur I plan to cover expenses through the emergency funds, PF money which I can withdraw in case of job loss or medical emergency. 

Asset Allocation is simple too as funds invest in Nifty 100 at a low cost. I am not planning to re-balance as I am in the wealth accumulation phase, will think once I am FI on allocation change.


An investment philosophy is to take high risks and ride the equity markets and use emergency and PF cash in case of tough times and long enough to reach my goal to have 25 times my last 12 months' expenses (I should be tracking my expenses every month without fail).

How often do you want to monitor your portfolio?

I am monitoring it daily now, which is not a good thing but can not help it. I Will see if I can monitor it only on weekends.

Stick with YOUR plan
Have to see how long I am going to stick to the plan.
(Aug17,Sep17,Oct17,Nov17,Dec17,Jan17,Feb17,Mar17,Apr17,May17,June17,July17) lasted for a year.

A new plan from August 18:

Invest in index funds UTI Nifty Index Fund and UTI Nifty Next 50 Index Fund hoping to invest for 10 years at least. The change in plan is to use a low-cost option and ride the tide with an emergency and PF cash cushion.

If money is in the Index I should monitor it once every month to calculate net worth.

A new plan from 5th May 21:

Invest in morningstar managed portfolio, ELSS/NPS Tier I for tax purposes, and invest in direct equities. The idea is to never sell any stocks or mutual funds I buy from here on. The coffee can portfolio will be a cornerstone for my investments from now on. The idea is that we have to give time for investments to mature for at least 10 years and choose carefully. It is tough to find stocks that give a CAGR return of 10% annually so if I buy something which gives that kind of return it makes sense to keep it rather than churn.

I will sell my investments only when I need money for emergencies (medical/unexpected travel) or unexpected events(job loss).

I will sell my investments when I need money to provide for my kid's education.

I will sell my investment if my investment thesis is wrong or if the investment turned out to be a fraud.

I will sell my investment if the CAGR for 10 years is less than the SBI home loan rate.

A new plan from 29th Nov 21:

Stay invested in morningstar managed portfolio, NPS Tier I for tax purposes, and invest in direct equities. Manas education fund will come from Morningstar's managed portfolio. Short-term goals will be done via ICICI I Wish goals.

I am selling direct stocks when PE is 30 for earnings strategy added HDY and AB strategy. AB will be a long-term core portfolio where the stocks are held for the very long term.

Unfortunately, I have used my emergency fund to buy stocks and am in process of building.

I will sell stocks based on set rules.

I will maintain emergency funds for 1 year of expenses in a high savings account.

I will not touch direct mutual funds.

I will sell investments only when I need money for emergencies (medical/unexpected travel) or unexpected events(job loss).

I will sell investments when I need money to provide for my kid's education.

I will sell an investment if the investment thesis is wrong or the investment turned out to be a fraud.

Step 1: Have the last 12 months' expenses as an emergency fund.

Step 2: Fund Manas education fund and other short-term goals.

Step 3: Fund tax-advantaged investment.

Step 4: Invest in direct equities.

Step 5: The idle money will be in a savings account.

May 22:

Step 1: Have the last 12 months' expenses as an emergency fund.

Step 2: Fund Manas education fund and other short-term goals.

Step 3: Fund NPS 50,000.

Step 4: Invest in direct equities and a small portion in Index funds.

Step 5: The idle money will be in a savings account or T-Bills.

Dec 9:

I am planning to buy dividend stocks only going forward, planning to invest 1 lakh in each stock with a 3% dividend yield, and hope the stock continues to pay a dividend. This allows me to deploy capital faster and the cost will be minimal. I have to deploy capital and let the company perform. Profits will only be dividends and no capital gains. I am also letting the company compound the retained earnings while using dividends if needed or buying more dividend companies. I will be the owner of the company if I do not sell. The disadvantage is missing in growth companies and attractive blue chip companies. I will miss a cash cushion. The stock market can fall 50% and I have to brace up for the ride. If the stock doesn't pay dividends it will not help me.