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Making Investment Plans

We had a presentation earlier today on Discord about how to take profits. A recording of the entire presentation will be shared on the feed later for the guidance on taking profits.


While Horse and Mayhem ran through the day trading and swing trading discussion, respectively, I decided to take a portfolio approach that is something we do in the investment profession for all our clients.


Given how important this is and how it can benefit everyone, I thought I would share this with the whole Traderade family and keep it here for reference.


It really isn’t difficult but what we prepare for every client we meet is an Investment Policy Statement. We fill up a questionnaire for each client with the following points.


I would encourage you to do the same for yourself and your family. And we should review this every six months to update our goals.



Some guidance on the building blocks.

  • Risk – When considering your risk tolerance, think about where you are in your life. When we’re younger, we have more time ahead and longer to work, so more time to recover. If we have two earning members, we have more risk tolerance.


  • Reward – Right down the return you want every year. This should be the after-tax return. It could be a dollar number or a percentage.


  • Time – How much time do you for payments / outflows. If you have a kid going to college in a few years, you want to time for that. If you have 10 years to retirement, you should plan for that.


  • Liquidity – We must always plan to keep emergency cash. Furthermore, we should also plan for how liquid our portfolio needs to be. If we have a dividend paying stocks, that’s giving us payments, we don’t have to worry so much. If we have a job to cover expenses, then we can probably have a higher amount in longer term investments.


  • Taxes and Legal – It’s always important to get professional advice on this so you know how to estimate your taxes, plan for how you will get paid during retirement, and plan for any bequests or gifts.


  • Unique – Any unique circumstance that pertains to you such as wanting to buy a second house. Or wanting to put a downpayment down on your kid’s first house, wanting to take world tour etc.


I hope that you will think about this, be brutally honest with yourself and write this down to plan for your future.

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