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Investing Guardrails - Purpose Statement
Good morning and Happy Saturday!
In continuation of the Investing Guardrails series I started last week, I will be reviewing a "Purpose Statement" for your portfolio.
Many organizations use purpose statements as a guiding light for the activities and direction of the group.
This same principle can be applied to finances, as well. I have used purpose statements for budgeting, functions of different accounts and my portfolios.
Having a goal or directive of your portfolio (in addition to your individual holding theses) can help provide visibility, focus and guardrails to ensure you are working to the desired goals.
Below is the "Purpose Statement" for my Roth IRA:
"Buy and hold. Goal is to increase retirement income. Maximize annual contributions. Reinvest dividends of underweighted holdings. Ok to hold mutual funds and ETFs to ensure long term wealth building. Adjust dividend reinvestment quarterly. Adjust sector allocation semi-annually. Adjust conviction rank quarterly. Rebalance quarterly by selling overweight, underperformers. Do not sell full position until held for minimum of 3 years."
You can make this statement as specific or general as you want - it is yours, after all!
I have this purpose written out in my tab that holds my total portfolio value in my Google Sheets workbook. That is where I review my available cash to deploy for new investments. Therefore, I see the portfolio's purpose every time I review and purchase holdings - a reminder to stay on track!
Hope this helps and you can find it somewhat useful!
Have a great weekend!
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