A key component of any financial plan includes an investor policy statement (IPS). The idea is to identify objectives, map a route to reach them, and detail the logistics in a manner where you can hold yourself accountable to the plan you create.
This is critical because in defining a specific course of action you create a model to stick to during times of financial turbulence. The biggest threat to achieving your goals is your very human frailty. Hard-wiring that served our ancestors well when the goal was to escape a lion on the savanna (change course abruptly!) will hose you financially as a modern investor.
Since money is just a tool to enable the proper allocation of time, an IPS offers a valuable framework for allocating the more rare and important resource. Using an outline from the Bogleheads wiki, here is my proposed IPS for my time:
- Develop deep, meaningful connections with family, friends and community.
- Develop a robust inner scorecard. Feel comfortable in my skin.
- Limit my attachment to and pursuit of stuff.
- Steward our family’s financial resources responsibly.
- Give more than I take. Do what I say I will do.
- Advocate for those on the margins.
- Do good deeds even when no good deed goes unpunished.
- Remain vulnerable despite risk of getting hurt.
- Take opportunities to connect, learn or understand despite risk of appearing foolish.
- Don’t give in a way that leaves my wife or kids shouldering the burden of my generosity.
- Time giving to proper rhythms in life. Give money when my kids are young, give time as they grow older and more independent.
- Disengage toxic personalities who manipulate via guilt or shame.
- Don’t attend every fight I’m invited to.
- Be a value-adding husband to my wife. Grow together, create a shared vision of our future, compromise. Make her happiness a top priority. Appreciate her.
- Imbue my children with wings, imagination, resiliency, love of learning and a work ethic. Fertilize the seeds I’m given without trying to bend them to my will.
- Be loving and present as a son and brother. Establish healthy boundaries and reasonable expectations. Give without enabling.
- No flakes.
- Reliable, present, thoughtful, values-driven.
- Willing to speak truth to power.
- Quarterly and annual reviews to set goals and evaluate progress, preferably over a glass of wine with my wife once the kids are asleep.
- Implement periodic tweaks to course-correct as needed.
- Evaluate based on: happiness, balance, passion, fulfillment, growth, fitness, purpose.