Do you know where your money is?

This seems like an easy question right? Yes, I know where my money is. That is what I thought one year ago when the financial markets melted down. I managed billions in institutional funds and lived through the sub prime meltdown. I got this. I didn’t. My cash fund that I needed to liquidate within a month had just lost 20%. The fund wasn’t a bad fund it was just not the best choice given the time horizon and purpose for the funds. I also didn’t look to see what was in the fund- I relied on my investment advisor. I learned the hard way the phrase” this fund cannot lose any money” was inconsistent with the investment objective for the fund. Everyone feels that they don’t want to lose money, I am sure investment advisor hear that all the time, so I think they are somewhat numb to it. Here are some lessons I learned and I hope you can learn from them as well. 

1. If your are outsourcing you investment management, prepare a formal investment guidelines document. Investment Guidelines should include  your investment objectives, risk tolerance, time horizon, and any special purpose for the funds. This also includes any future needs for the funds including the withdrawal of funds to cover taxes. 

2. Conduct regular portfolio reviews, at least bi-annually. The review should cover not only the investment portfolio including what is in the mutual funds owned, but also a review of your investment guidelines. 

3. You care the most about your money, watch over it.  Even if you outsource the investment management this is true. 

The same holds true if you manage your own money, follow these steps. Have a third party review the documents, we all need validation especially when it comes to investments! 

Let me know how I can help! I am happy to share investment guideline templates as well as investment advisor reviews, what you should be looking for. I am also happy to offer a complementary one hour consultation to get you on your way.