In exactly the same fashion if you are a serious player in the wealth creation business, we must be particular about the record keeping of your income, expenses, investments, taxation, etc.

Record keeping is necessary (nay, compulsory) for 3 main purposes:

1. Tax returns filing
2. Investment performance tracking
3. Goals monitoring

All the 3 are critical and let us start in the same sequence as mentioned above.

You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good record-keeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing (pun intended!) experience.

Records help you document the deductions you’ve claimed on your return. You’ll need this documentation should the IT department select your return for examination (in official lingo called scrutiny). Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, share transactions, and business or rental property — should be kept longer.

In most cases, the IT department does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your tax return:

• Bills
• Credit card and other receipts
• Invoices
• Mileage logs for those claiming reimbursement of car expenses from the employer

Investment records – those which have helped you claim the deductions
• Cancelled, imaged, cheques or any other proof of payment

• Any other records to support deductions or credits you claim on your return.

Good record-keeping throughout the year saves you time and effort at tax time when organizing and completing your return. If you hire a paid professional to complete your return, the records you have kept will assist the preparer in quickly and accurately completing your return.

Nothing lasts forever, but you wouldn’t believe it by looking at some people’s record-keeping systems. People insist on keeping every scrap of paper, just in case. And when it comes to tax paperwork, folks are even more adamant. These documents will save me, they argue, if the IT department comes visiting.

But that’s not necessarily the case, say tax and organizational experts.

When it comes to tax-related documents, you should keep those that help you identify sources of income, keep track of expenses, determine the value of property, prepare tax returns or support claims made on those returns. However, common sense — as well as storage space — should be your guide.

The rule of thumb for tax papers is hold onto them until the chance of audit passes. Usually, this is three years after filing. But if the department suspects you underreported your income, it gets seven years to check into your tax life.

That’s why most accountants advise taxpayers, even those who are meticulous filers, to keep tax documents for six to 10 years.

Some items, however, have a longer shelf life. These generally are assets that a taxpayer will eventually sell, triggering a tax bill. So if you have a pension plan, an endowment plan, own a home or invest in the share market, tax pros recommend keeping these records indefinitely.

For most taxpayers, the biggest asset — and potential tax bill — is a home.

While the rules for home sales have changed in recent years, meaning sale profits don’t automatically face Capital Gains, any paperwork relating to a residence should be kept for as long as the home is owned. Inherited homes, homes broken down and reconstructed, etc. are all potential areas of tax confusion and should be taken care of.

Fast on the heels of home sales as tax triggers (and record-keeping headaches) are share transactions.

“A decade years ago, it was harder for people to invest so a lot were more conservative and went to a bank for a fixed deposit,” says Rohit Mehta a stock broker. “But with online trading, people are investing more. Keeping track of a FD or PPF wasn’t that difficult, but when you move on to shares, the tax record keeping becomes critical.”

Investment account statements contain financial data that a taxpayer will need as long as the share or mutual fund is owned. On the share side, there may be splits (bonus, rights, change in face value) that change the value of the holding and, therefore, the eventual worth of the share, which is used to determine the taxable cost.

Retirement record requirements

And then there are all those retirement savings plans, with all those different rules.

Contributions to PPF are tax free. But pension plans are tax-deferred. But sometimes already-taxed money goes into these accounts, too.

Business considerations
If you operate a small business, from a moonlighting job to a small operation with several employees, dealing with records becomes a bit more complex.

The Income Tax generally focuses on self-employed travel and entertainment expenses, scrutinizing returns to make sure all the expenses are really related to the business and can be proven. In these cases, complete and accurate — but not overdone — contemporaneous records need to be kept until the audit threshold passes.

Unlike personal bank statements, business financial account records should be kept permanently. Similarly, anyone who has employees should hang onto employment information and related tax returns for as long as the business is running. And don’t shred articles of incorporation, company bylaws, shareholder minutes, and trademark and copyright applications.

Pick a system, any system
Once you’ve identified critical records, the next step is to decide how to keep the data. Electronic bill paying can help keep track of your financial and tax life, but so can a plain old check register, as long as expenditures are entered faithfully. Do you need the computer and the world wide web to do it? Yes and a no. For repetitive, boring and accurate work the computer is a far better ally. The human mind it horrible in record keeping. Try calculating how much you spent on food in the past one month. Software programs (with faithful data entry work) can do a far, far better job.

It doesn’t matter if it’s a filing cabinet, cardboard boxes or a complex computer program. The key, is to find your record keeping comfort level, pick a system and stick with it. Myiris plus is a convenient way of aggregating your financial life and keeping it organized. It helps you know exactly what your net-worth is, when your bills are due, how much of cash you withdrew in the past 43 days, how your mutual funds are faring, which income tax form to use while filing your return, etc., etc. Ranjan Verma was also working on an accounting system – I have no clue on what stage that is now. Surely other financial practitioners also must be having some system which works…check them out too. 

Once you start down the path to investing, one thing that you’ll notice is that the paperwork piles up fast. You’ll get a confirmation every time you buy or sell a share or mutual fund, and every time you move money into or out of an account. And each of those account statements will probably include a couple of transactions, such as dividends you’re received or interest that’s been credited to your account.

If you invest using dividend reinvestment plans, or SIP (Systematic investment plans) you’ll have another set of statements to deal with, for each SIP and for each transaction. Every time you buy a mutual fund, you’ll receive a statement in the mail. Shares you own will send you quarterly and annual reports.

The bottom line: You’ll be swimming in paper if you don’t get organized. Besides the advantage of keeping your desk or dining room table clutter-free, myiris plus (www.m3.myirisplus.com) provides two some other important benefits:

Your CA will have all the up-to-date details in one location.

In case of you are physically (or mentally) disabled (or dead) the next person will find all the details in a well organized manner.

You’ll be better equipped to know how much of your investing profits you’ll owe to the tax, and can make better decisions regarding the tax implications of any investment decision. Tax planning (which happens much before tax filing)

You’ll be better equipped to figure out how well your portfolio has been performing and what problem areas you might need to address.

The biggest advantage of myiris plus to me comes from GOALS tracking. Most of us earn money to spend – on our selves, our families or charities. If this is so all the monies are earned towards meeting some goal. Goal tracking means checking whether your investments that you made towards a particular goal are going on track. Myiris plus, going forward will help you set milestones and check whether the direction and speed of your investments are appropriate of whether it requires any change – in the direction or the speed. This to me is the biggest advantage of record keeping – it helps your Track your goals.

After all Tracking is the last word in being SMART!

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Communicate your vision to your agent in a way that he understands. Too many agents start giving directions before knowing where the client wishes to go. Instead of getting into who has communicated badly, it is the clients job to ensure that the agent understands the destination before he starts driving!

Long term wealth creation requires a certain mind set – it is about choosing the more (sometimes) painful path rather than the easy path. Show your committment. Do not pull off the SIP or the Unit linked plan because the market came down 5%. Do not chew the agents head because your fund finished 9th instead of 1st. When your kid comes 5th rank instead of 2nd, you spend time with the kid, do you not? See the fund performance over a longer period. Elsewhere there is an article on mutual fund performance read that. Keep reading and learning – and make sure your agent does that too.

Be humble enough to learn from various sources and from your agent as well – make sure he is constantly updating you on the same! Great clients seek to learn from books, seminars, good magazines, and many such sources. Great advisors learn and keep their clients upto date on whats happening. So be great!

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1983: India, rank outsiders, win the World Cup. Beating the mighty West Indies led by Clive Lloyd. Kapil Dev the captain

1985: India win the Bensen and Hedges Cup in Australia. India going in as favorites, beating all the teams, taking all the opposition wickets except in the finals when we took 9 Pakistani wickets. Sunil Gavaskar…captain

2007: Winning the T-20 world cup

2011: Dhoni’s superb 6 to take the world cup….images etched for ever!

Clear Goal setting by Sachin, conveyed to the whole world…focus. When you want something, write down the goal, remember it and convey it. Then the UNIVERSE conspires to make sure it happens for you. Sachin Tendulkar we are proud of you. As Virat Koli said ‘He has carried the nation’s expectation for 21 years…it is time we carried him on our shoulders’.

Correct Mahendra Singh Dhoni, you are a great captain….all the best.

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When ‘WM’ died and went to heaven, she was not very happy. She spoke to God and wanted to know how come she did not get many things in life that she wanted.

God did not say anything. He just smiled at her and said ‘Kid go around Heaven and see everything for yourself’.

After a couple of days, she came across a room ‘things I wanted to give to people, but they did not want’.

She wanted to see that room..and God said ‘Oh! this room I will have to show you myself…and He came along’.

The first gift they saw was a big huge gleaming Mercedes Benz.

She was stunned that somebody could have refused to accept a lovely gift like this. Out of curiosity she asked God…who was this person who refused such a nice gift! God said “it is you my dear Child”…she was aghast. She said “impossible..I would never have refused this”

God said “Every time when you prayed for a car I would keep this car ready, however when you prayed you thought of a small second hand car…clearly your visual prayer also reached me…”

So like everybody I remembered what I saw…..so kept on sending you what you visualized.

So the education you got, the husband you choose, the house,…..everything you got what you asked from your heart and what you visualized…now it is not fair that you blame me.

So all you kids out there who know who is WM….or those of you who do not know who is WM go out there and remember, Visualization is a powerful tool. It is your communication with the outside world, and with HIM.

So, if you really want something in life, Visualize it EXACTLY how you want it, write it down, make copies of it, stick it in your bedroom, office, bathroom,..live your goal, dream your goal, pray for your goal…..and you will see Nature conspiring to make it happen.

I have seen it happen so often…that I could write a book…so go out there and VISUALIZE – it is a form of prayer.

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However is a good list of resolutions that you can make – it is really useful if you made it already, just reiterate it, and follow it! So here it goes

1. I will write down my financial goals – NOW, IMMEDIATELY.
2. I will convert a big portion of my savings into investments – especially if you are less than 55 years of age.
3. I will live a simple, frugal life by choice – but choose my dream career.
4. I will start saving/investing for my retirement – NOW IMMEDIATELY.
5. I will have regular conversations about money, saving and investing with my colleagues, friends, spouse, kids and parents – all people for whom I feel financially responsible.
6. I will not deal in direct equity with my current level of knowledge of equities.
7. I will increase my financial knowledge – inter-alia by visiting www.subramoney.com, www.myiris.com, www.moneycontrol.com, and such other sites.
8. I will maintain my income and expenditure details diligently and keep reviewing them.
9. I will maintain proper records of my assets and liabilities, understand the risk of each asset class, and do proper asset allocation.
10. I will protect all those people dependent on me. Will review my term insurance, medical insurance and retirement and make sure it is up to date and adequate, and the nominees are current.

Most important:  Properly stick to all the resolutions!

Over the next few days I hope to elaborate on all the above resolutions.

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“Whatever I do, my weight does not come down” and “Whatever I do I cannot reduce my expenses” – are commonly heard statements. If you are a doctor, a wealth guide, a financial planner, …you hear both of these statements. Normally people do not write down diligently what they earn, spend and invest. Similarly for reducing weight you need to maintain a food diary which will tell you what you eat…and then you can analyse the same.

Let us see what makes a good budget? In all the budget blunders exercies, the same few problems keep rearing their ugly heads. To avoid them, here are the important features of a successful budget.
1.    Categories that fit your personal situation and your families’ spending habits.
2.    Accurate income projections. Salaried individuals have it easy. In case of self-employed people – they tend to dramatically over/under estimate their incomes.
3.    Enough categories to give you a meaningful picture of where your money goes and where you might be able to cut costs, but not so much detail that tracking is a chore that you’ll soon give up. Breaking up of your medical expenses into doctors’ fees, and medicines is fine. But if you try further breaking up medical expenses into generic and branded – you might give up the whole exercise.
4.    Inclusion of expenses that don’t occur on a monthly basis, such as car maintenance, term life insurance premium, festival expenses, clothes buying, etc.
5.    Regular review of categories to determine if you need more or fewer, review of expenses, and brainstorming about ways to reduce costs in each category.
6.    Cash spending is a big leak in most budgets. Cash disappears quickly and if you don’t write down everything you spend it on, you will not have a clear picture of your spending.
7.    A minimum saving amount – at least till you build your emergency fund.
8.    Realistic written goals. Budgeting is about setting financial goals (saving for a down payment on a house, buying a new car, getting out of debt, saving for retirement, putting your kids through college, travelling, etc.) and finding ways to meet them.
9.    Identification of spending patterns you may not have been aware of when you weren’t tracking your spending.
10.    Most importantly, internal motivation and a positive attitude!

http://www.subramoney.com/book-written-by-me/

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The resolution no. 1 was: I will write down my financial goals.

I am sure, you are thinking Oh My God, this is boring. Sure. Success is not about knowing (Saraswati), but finding a Guru (Hanuman) to make you wise enough to do (Parvati). Robin Sharma (yes the famous one!) says the advantage of setting Goals is it gives you Focus, Growth, Measurement, Alignment, and Inspiration. His article on Goal setting is surely worth reading – and is google able – if you do not get it try “dna india goal setting robin sharma” you will surely get it.

Most people have financial dreams. In fact all of us have dreams. Dreams are like this:

1. I want to lose weight

2. I want more money

3. I want a bigger house

4. I want to travel more.

Are these goals? The answer is no. These are dreams. A dream becomes a goal when it is SMART – i.e. it is specific, measurable (with regard to the amount and time), actionable BY YOU (not dependant on millions of other things), Realistic and it is TRACKED.

Writing down the dream (thus making it a goal) allows you to live the goal – rather than dream the desired asset. Typically if you want a car saying things like “I wish to own a Black Jaguar car, costing Rs. 75 lakhs, for which I will do a SIP of Rs. 150,000 a month for 4 years in Hdfc Prudence fund, accumulate this money and buy this car as soon as the fund value reaches Rs. 65 lakhs, borrowing the balance”.

This is a SMART GOAL – in our case a SMART FINANCIAL GOAL. You can set such similar goals for many things in life. Like saying “I wish to reduce 9 kgs. in the next ONE year, and for this I will join (and go to!!) a Gym near my house, stop snacking on fried foods, eat home meals as much as possible, use a food tracking diary and monitor my weight in an excel sheet”.

If you write down the pleasures of reaching the goal in a seperate sheet, take pictures of a black Jaguar and paste it all over the place – bathroom, bedroom, office, etc. the whole thing will work on you. And as they say “nature conspires to make it happen”.

So viola if you did both these mentioned here you would have a black Jaguar in 4 years time and you will weigh 9 kg less in one year. Oops I forgot, these examples are not important, your GOALS are!! So best of luck.

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There is one important question that is missed. Does this person NEED it? If I am going to travel 18 km a day for 5 days a week, do I need a Merc or a smaller car will do?

This is the essence of financial planning. The planner should be able to make the client do the following:

1. Set the goals

2. Make it into Needs, Wants and Luxuries

3. Priotrize the goals

4. Allocate the funds towards the goals.

Should I be buying something because I can afford it or should I be buying it because I need it. I think my usage of any asset should take into account my need and how abusive it is of the environment. If all of us think this way, maybe we will have lesser complicated lives. Both financially and physically.

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Large organizations, fund managers, and big investors create IPSs for their investment plans. Financial advisors craft them for their high-net-worth clients. You need one, too.

Why? Because the IPS forces you to put your investment strategy in writing and commit to a disciplined investment plan. Even better get a friend, wife, daughter, neighbor, some third party to co-sign and monitor.

Here’s what you should include in your ips, and a sample you can imitate. This is a client and friend who is willing to share her investment philosophy statement, everything here is true but the name–let’s call her Sneha. You need to substitute your own goals, investment-selection criteria, and expected outcomes.

Executive Summary The important elements of your IPS–your current assets, time horizon, expected return, tolerable losses, and portfolio benchmarks–appear at the start of your ips in a summary format. Remember, we realise that you may not be able to estimate your risk taking ability, so please take the risk portion, in small bits. You’ll come back to your Executive Summary when you rebalance your portfolio.

Here is Sneha’s summary.

Current Assets: Sneha has a total of Rs.3, 000,000 in assets.

Time Horizon: With 16 years to retirement and an expected 30 years in retirement, Sneha has a 46-year time horizon. (Yes she is 35 years of age! and she assumes she will live till the age of 81 years)

Overall Portfolio Expected Annual Return: Sneha expects a portfolio return that is 4 percentage points above the rate of inflation. This is what we call in Economics as a “Real return”.

Calculating your expected return can be tricky. I suggest that you come up with a return figure in excess of inflation. Inflation will vary over time, but it’s the incremental return over inflation that is the most important determinant of whether you meet your goals.

As a guideline, here are the real annual returns (above inflation) that Sneha plans to use:

· Large-cap : 6.0%

· Mid/small-cap : 6.5%

· Index: 5%

· Bonds: 3.0%

· Bond funds: 3.25% (again a tricky assumptions, but you are going to be on watch, are you not?)

If you have a balanced portfolio, you’ll have a blend of these returns based on your asset-allocation mix. If you are very conservative, choose numbers below my estimates. Conversely, if you are aggressive, adjust the numbers upward.

Loss Limit: Sneha says she could accept losing 15% in any single year. Over a five-year period, she could lose 3% annualized. Your loss limit is the most you expect to lose over a specified time period given your tolerance for risk. So in this case, Sneha knows that she could lose 15% in any one year, and she’s willing to accept that level of risk. Over a five-year period, she knows that she could lose 3%. If her portfolio fell by more than that, she’d have to re-examine her securities. Investors need to balance taking on risk in order to meet their goals with taking on too much risk and losing more than they can afford to.

Asset Allocation: Sneha has set the following lower limits, targets, and upper limits for investment in each asset class.

Rebalance when your portfolio exceeds the upper or lower limits.

Evaluation Benchmarks: For evaluation, Sneha will compare the total return of each security to its category and expect it to be in the top 33% of its category over three and five years. She’ll also ask whether she is able to reach her goals. Even if your investments fall short of your benchmarks, you may not want to sell them if they’re still getting you to your goals. For example, take a look at Franklin India Blue Chip. In 2005, the fund returned 53% but ranked in the category’s lower end. If that performance is enough to get you to your goal, you may not want to sell, even if most of the category is outperforming your fund or stock. It’s really a matter of judgment. Also remember you are answerable only to yourself. Do not invest to impress somebody. Invest to create wealth.

Objectives After you’ve created an executive summary for your IPS; it’s time to state your goals. What are you trying to accomplish, and in what time frame? Seeing your objectives in writing makes a lasting impact, and it comes in handy when it’s time to rebalance. If you have multiple goals, here’s the place to prioritize those objectives. See other articles on goal setting.

Here are Sneha’s objectives.

1. To retire in 16 years.

2. To be able to spend Rs.300, 000 per year, post-tax, during retirement.

3. To make her assets last the rest of her lifetime.

Investment Philosophy Note down the basic investment theories that you believe in and plan to follow. Consider your ability to tolerate risk, your plan to balance risk and return, and any other principles you consider important to your long-term strategy.

Here is Sneha’s approach to investing.

1. Sneha will balance taking on as much risk as she possibly can to achieve a higher long-term rate of return with her ability to tolerate that risk and not panic in a downturn, selling at the wrong time.

2. Recognizing that she will never know which asset class will outperform each year; Sneha will diversify across a wide range of investment opportunities. Then she can participate in the upside of most asset-class performance without over concentrating in one area and risking a loss that she can’t tolerate.

3. Sneha will control costs by limiting expense ratios, fees, loads, brokerage costs, and advisor’s fees.

4. At her age of 70, she hopes she will be able to shift all her money to a non fluctuating investment like RBI Bonds so that she can sleep peacefully. However, this amount will have to take care of inflation, and last till her age of 81.

Preferences and Constraints Every investor has unique circumstances that influence his or her investment decisions. Write down any that apply to you.Sneha’s preferences and constraints:

Time Horizon: Sneha has a long time horizon–more than 10 years. She can afford to tolerate short-term market fluctuations.

Asset-Class Preference: Sneha believes in the concept of allocating her assets over a variety of sub-asset allocation categories. For example, within her stock allocation she’ll hold large-cap value stocks, large-cap growth stocks, mid/small-cap stocks, and perhaps international stocks. She chooses not to use sector funds because she thinks their risks are more than she can tolerate.

I have tried talking her out of international funds because of MY INABILITY TO PICK THOSE FUNDS. Also I have given her the logic that if Tata Motors, Bharat Forge, Carborundum Universal, M&M, Ranbaxy, TCS, Iflex are in her portfolio she is participating in the international market in a big way. Of course some portfolio puritans can argue about how she is not participating in the p/e of the foreign markets.

However the Financial Advisor’s limitation should be known before hand. For e.g. I have no ability to time the market, to trade in commodities, or time entry and exit in gold. In case you need expertise beyond what is available with your planner, you need to know how to seek it – and your planner should help.

Performance Expectations: Sneha’s goal is to beat inflation by 4% annually on an overall basis.

Tax Issues: Sneha has significant capital gains in her equity portfolio. She will keep partially liquidating her portfolio regularly. This emanates from the fact that one can expect the capital gains tax, estate duty, dividend tax to be applicable in India over a 30 year period for sure.

Risk Tolerance: Given that Sneha has a long time horizon, she is willing to tolerate short-term market fluctuations of up to a 15% loss in any one year. She wouldn’t want to lose more than 3% over any five-year period, though.

As mentioned in the executive summary, if her portfolio fell by more than 15% in one year or 3% in five years, she’d have to re-examine her securities to see how she could cut back on the riskier holdings.

Asset-Allocation Limits:

Sneha plans to always have at least 5% in cash, but never more than 10%. She would never want to have more than 25% of her assets in mid/small-cap stocks. Further, she’d never want to have less than 40% of her assets in large-cap stocks. She would never want the combination of cash and bonds to be more than 30% of her portfolio. The international flavor is to be met by investing in mutual funds with an international exposure or Indian companies with tons of exposure to foreign markets; however Indian portfolio will be through a combination of unit linked plans, mutual funds and direct equity.

These limits represent how much risk Sneha is willing to take with her overall portfolio. Every asset class has an associated level of risk and expected return. The amount of assets you put in each category depends on how much volatility you can tolerate.

Investment Selection Criteria Everyone should consider how they pick their investments. Sneha’s investments must meet the following criteria:

True Lo-Load Funds Only: Funds with any type of front load > 2% will be eliminated.

Performance Consistency: All core funds must have consistently performed in the top third of their category for seven years (at this stage it means no Ulip), but a small portion from the monies marked for international stocks will be used here.

Expenses: Large-cap funds cannot have an expense ratio greater than 2.2%. Small- and mid-cap funds cannot have an expense ratio greater than 2.5%. Bond funds cannot have an expense ratio greater than 1%.

Sneha established these limits by finding the average expense ratio in each category and then adjusting up or down depending on the pool of available high-quality funds.

Style Purity: Funds must walk the talk. A blue chip fund cannot load itself with mid cap or small cap stocks. Since rebalancing is what Sneha wants to do herself, she does not like balanced funds.

Qualitative Factors: Once she has scanned the investment universe down to a pool of funds and stocks that meet the above criteria, Sneha will then rank the securities from highest to lowest by seeing the risk adjusted return. She is smart enough to realise that fund ratings are irrelevant. She also does not kid herself into believing that she and her advisor CAN beat the market or find fund managers who can consistently beat the market. She will also index about 30% of her equity portfolio. As a final selection, Sneha will look beyond the numbers to qualitative factors. She will read the Analyst Reports and visit the funds or company’s Web site to see what more she can learn. The idea is to look beyond past performance. And keep learning. She is a great client – what I keep learning from her is immensely useful when I deal with other clients.

Need to Review! This section is your blueprint of what to look at when you are rebalancing your portfolio. It forces you to think through your watch list and sell criteria. Here are Sneha’s reviewing procedures:

Although Sneha will review her portfolio performance on a quarterly basis, she will not make sell decisions more often than annually. At that time, she will not only review the returns of each of her investments against their peer groups, but she’ll determine whether these investments are edging her toward her goals.

Here are the questions Sneha will ask about each investment: · has the allocation to the investment changed by more than the upper or lower boundaries outlined above? If so, consider selling some of the gains (and perhaps netting out some losses), or rebalancing

· did the overall portfolio beat inflation by 4%? If not, what changes are necessary to meet this criterion? Are performance expectations reasonable?

· Are there any changes to make due to a shortened time horizon?

· Were there losses in the portfolio? Were overall portfolio losses within the loss limits specified above? If not, which individual securities were responsible for the overall losses? Has anything fundamentally changed for these securities? Do we want to make a change?

· Are the securities in the top third of their peer groups over the past three- and five-year periods? If not, they should go on a watch list. It’s not time to sell, but keep a close eye on future developments. If the security is on the watch list for more than two or three years, see if it is still meeting the long-term goals. If not, it’s time to sell. If she is contemplating selling a security, Sneha will ask the following questions:

• Is the investment preventing me from achieving my goals?
• Do the impacts of selling outweigh the opportunities of a new investment?
• go to www.myirisplus.com and keep track of your portfolio – it will tell you where you stand on a day to day basis, apart from helping you file your tax returns
  

Take a go at it! Use Sneha’s guide as a guideline for your own IPS. Fill in your own expectations and criteria. Date it, sign it, and let’s come back to it in a year. It’s the framework for analyzing your portfolio’s performance–and for whether you are progressing as you should toward achieving your dreams. Remember, Sneha is a friend, client and a great soul, not necessarily in that order! She is software marketing professional, unmarried, staying with her parents who are fully provided for. The only insurance she has is a 4- year old endowment policy with critical illness. She has a house where she is living with her parents, and hopes to live in it during her retirement. If your circumstances are different, ensure your risk cover also becomes a part of your Investment Philosophy statement.

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