This is part II of our series on strategic planning for your finances. Today, we’re covering all things investment management.
In this series for the Beyond Finances podcast, we’re talking about strategic planning for your money.
Over a number of episodes, we’re asking what it really takes to do financial planning. It’s a process, never a one-time event. So what makes up that process, and how can you follow along for yourself?
First, we covered values-based planning and specific strategies to implement within the financial plan. (You can catch up on part I of the series here.) Now, we’re looking at stage 3 of the overall financial planning process: the ins and outs of the investment management process.
The right investment strategy is critical to growing your wealth over time.
In part II, we talk through what you need to do to put together a sound investment strategy for yourself, and the to-dos any investment manager should take (whether that’s you as a DIYer, or an advisor who you hire to manage your assets for you).
This episode covers:
- Assessing risk tolerance and risk capacity (and the difference between the two)
- Understanding your investment time horizon
- Allocating your assets correctly (which does NOT just mean what percentage of your portfolio should be in stocks vs. bonds)
- Selecting investments and coordinating account types
- Diversifying your investments – in all kinds of ways! Diversification of specific assets, across asset classes, with the specific vehicles you use (and what specific assets you put into each account or vehicle you use)
- Considering tax impacts of your investment choices (and the tax planning you should do for your investment portfolio)
- Calibrating your portfolio for the return you need (which includes knowing reasonable return expectaions)
- Remembering fees and expense ratios – and other basics like rebalancing
- Explaining why tax loss harvesting is not right for everyone (sorry)
- Doing ongoing due dilligence to understand if and when you should replace assets in your portfolio
- Choosing contribution strategies
- Setting up standard rules to guide your ongoing decisions and complete maintenance over time
Ultimately, you should understand your investment stategy and why you set it, so you can stick to it when things get wonky in the markets (which is inevitable over time).
And that brings us to our most important strategic planning advice for going through the process of setting up an investment management system that works for you:
A good strategy, stuck with over time, is better than the “best” strategy you found only after trying multiple different things and interrupting your progress with each change.
Ready to get investing to grow wealth? Tune into Part II of the Strategic Planning for Your Finances series here:
Want More? Here’s How to Connect
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