Are You Planning to Fail, or Failing to Plan?

Allstate Insurance recently ran full-page newspaper ads with a headline that read, “Last year Americans spent 19 hours planning for retirement.” The subtitle then reminds us that we spent a similar amount of time planning Thanksgiving dinner. My first reaction to the ad is that it grossly overstates how much time most folks spend truly thinking about retirement or any aspect of their financial situation. With the turmoil in today’s global markets, a lot of people are indeed worrying about their financial situation. They are frightened and uncertain, but most are paralyzed and unable to truly think through the implications – both short- and long-term – to their financial future.

If there is any good that comes from the pain of the 2007-2009 Great Recession, it will be the realization that a haphazard approach to investing will provide haphazard results. Investing is not rocket science, and anyone of moderate intelligence can assemble and monitor a well-diversified portfolio. The only hard part is taking the first step. Everyone -- and I truly mean everyone -- should have a written Investment Policy Statement (IPS) that includes their financial goals and aspirations, time horizon, fears and concerns, and asset allocation strategy. This IPS will not be carved in stone because life is a journey, and our financial lives will take many twists and turns. The very act of writing down our financial goals and strategy makes them more real, easier to monitor, and harder to ignore.

And here’s the good news. Rather than just telling you what to do, I’m going to show you. I’ve developed a sample IPS template (which was included in Your Nest Egg Game Plan) that you can download as a Word document and modify with your personal information. Click here to visit my Hard Working Money website and download the IPS template.

Completing the IPS will take some time but it will be the most important investment you make this year and in the years ahead.