Everyone has a different investment strategy. They may look similar to someone else’s, but they’re never totally identical. Your approach to investing is so unique because your decisions should be based on your family’s wealth management needs and financial goals.
Before you even start investing, you need to contact your wealth manager and find out more about your family’s current financial situation. Maybe you’re taking over for your aging parents, or maybe you’re contacting a wealth manager for the first time to do something about your own accumulated wealth. After you’ve done this, you have to figure out preliminary investing goals. This is the beginning of forming a strategy.
Assemble Your Team
Your next step is assembling an investment advisory team to help you plan out your investing strategies as well as manage your portfolio. This team should consist of five major players. They include:
- Financial counselors
- Your adult children
- Wealth Managers
You may already have a financial advisor or wealth manager that can help you assemble this team and gather in helpful contacts. This team will help create an initial plan for investing and will help you keep your plan on track. As your plan develops, you may need a team manager to assist with any changes or updates to your plan.
Fine Tune Goals and Constraints
Your initial financial goals and strategies could still be in place, but they may need to be slightly altered. For example, perhaps your starting goal was to make a certain amount of money, but now that you have that amount or are steadily working towards your goal, maybe your new aim is to maintain that amount of money. Some other common changes to investment goals and strategies include changes in the family, like having children. Perhaps you’ve had a child and now need to consider future college expenses.
Your strategies should never go stagnant. Review them often to ensure that they’re still working for you and that they’re the best fit for your financial needs and goals.
Write Up an Investment Policy Statement
An investment policy statement is a detailed explanation of your investment strategy, and writing one out can help direct your focus and keep you on track. You can write up a broad IPS, or you can write several smaller ones that address certain goals and parts of your life. For example, you can write an IPS that addresses the needs of your children as well as one for maintaining your lifestyle and for retirement.
Wise Asset Allocation
The reason you have an investment team is because investing can be a risky business. It often requires a sharp and watchful eye to ensure that you don’t lose more money than you accumulate. Keep a close eye on your portfolio, or have your wealth manger keep an eye on it for you. A solid investment team can help you make portfolio changes that are strategic and considered carefully.