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Investment Policy Statement Portfolio

Aug 17, 20253 min read

🗂️ Investment Policy Statement (IPS)

🏦 Accounts & Custodians

  • Schwab: IRA, Roth IRA, Inherited IRA, taxable brokerage
  • Vanguard: Taxable brokerage
  • Fidelity: HSA
  • USAA: Savings account

💱 Currency Transfers

  • Use Wise or Spartan FX for USD → EUR transfers (from USAA to Millennium)

💡 Investment Strategy

  • Core Holdings:

    • US Stocks (broad index)
    • US Treasury Bonds
    • Gold

  • Excluded Assets:

    • No actively managed funds, derivatives, REITs, individual real estate, commodities, individual stocks
    • No leverage

  • Fee Discipline:

    • Prioritize lowest-cost funds

🗃️ Asset Location Policy

  • Allocate by relative tax efficiency
  • Gold is prohibited in taxable accounts

📊 Asset Allocation Policy

  • Bond Allocation = Age − 20
  • Gold Allocation = 5–10% (via low-cost spot price ETF)

🧭 Current Allocation (Age 60):

  • 30% VTI — Total US Stock Market
  • 30% AVUV — US Small Cap Value
  • 12% GOVZ — Long-Term US Treasury Bonds
  • 13% GLDM — Gold
  • 10% DBMF — Managed Futures
  • 5% Cash/T-Bills

💰 Contribution & Deployment Policy

  • Automate contributions whenever possible
  • Deploy investable cash immediately (no DCA or market timing)
  • Automatically reinvest dividends

⚖️ Rebalancing Policy

  • Threshold: Rebalance when allocation drifts ±20% from target
  • Frequency: Review quarterly
  • Mechanism: Use rebalancing as a Shannon’s Demon strategy — systematically capture volatility
  • Visual Aids:
    Rebalance Visual

🏦 Withdrawal Strategy

📝 Possible Future Update: Explore amortized withdrawal method for smoother cash flow

🔄 Change Management Policy

  • Asset/Allocation Changes: Require 3-month waiting period unless fund is liquidated
  • IPS Revisions: Require 6-month waiting period

🎯 Why This Works — The IPS Philosophy

  • Diversification with Low Correlation Assets (Holy Grail Principle):
    Spreads risk across different sources of return

  • Macro-Allocation Drives Returns:
    Asset allocation explains ~90% of portfolio outcomes (Correlations Tool)

  • Simplicity Principle:
    Complexity is a cost. A simple, disciplined approach maximizes efficiency and reduces behavioral risk

  • Behavioral Guardrails:
    Clear rules help avoid emotional decisions and market timing traps

  • Shannon’s Demon (Rebalancing Alpha):
    By consistently rebalancing, you buy low, sell high, and potentially capture volatility-based growth

  • Evidence-Based Withdrawal Strategy:
    A CAPE-informed, inflation-adjusted withdrawal approach balances sustainability with spending needs

📝 Summary Checklist

  • ✅ Use passively managed index funds only
  • ✅ No leverage, no derivatives, no REITs, no individual stocks
  • ✅ Automate contributions and reinvest dividends
  • ✅ Rebalance quarterly or at ±20% drift, using Shannon’s Demon principle
  • ✅ Withdraw 4–4.5% annually, adjusted for CAPE and CPI
  • ✅ Apply change management waiting periods
  • ✅ Ignore headlines — stick to the plan

📚 References & Further Reading

⚖️ “Ignore short-term noise. Stay the course. Think long-term.”

💰 My Finance (MOE)

transfering Highland REITs back to compushares

Graph View

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