• Wealth Management Division

June To-Do List

REMINDER: Investors who are paying quarterly estimated tax payments will need to have them in by June 15.


On your June to-do list should be a review of your investment policy statement (IPS) and retirement policy statement (RPS). If you do not have them, we strongly recommend creating such statements.

So, what is an investment policy statement? IPS is simply saying a guide to your financial future, a roadmap you should follow, in order to achieve your broad financial goals and objectives. You can create one yourself or a professional financial advisor, like myself, can help you build one. Either way, IPS should include such topics as your financial goals, asset allocations, risk tolerance, duration, and specifics on how often you should monitor/rebalance your portfolio.


When building or reviewing your IPS you should first focus on the following 5 objectives:

  1. What is the reason for your investment? Is it long-term growth, capital preservation, retirement saving, or maybe a stream of current income?

  2. What is your risk profile? Are you a conservative or more aggressive investor?

  3. What is the time horizon?

  4. Do you have or would have any short-term liquidity needs?

  5. What rate of return are you expecting?

After reviewing your objectives, you should check if your current portfolio is aligned with your objectives and if current allocations among different financial products are proper. In case of a mismatch, it is recommended to rebalance your portfolio and continue to monitor the performance. It is common to rebalance a portfolio on an annual basis, however, there is no universal rule for rebalancing. Still, you should keep in mind that frequent portfolio rebalancing, more than annually, may result in certain tax consequences.


In general, your IPS should not be overly complicated, but should clearly state your financial goals and objectives. You should definitely conduct a review of your IPS on an annual basis to make sure it corresponds to your current situation and reflects your current investment approach.


If you are getting close to retirement or already retired, having a clear retirement policy statement is very important as well. Similar to IPS, RPS is focused on your financial needs during your retirement and helps outline a strategic plan to meet your financial goal when retired. Typically, RPS addresses the specifics of retirement spending strategy, income needs, Social Security coverage, and portfolio spending rate.


Christine Benz, a Morningstar author, has outline 8 steps that can help you develop a thorough RPS:

  1. Specify your retirement details – this should focus on the details of your retirement program.

  2. Outline your retirement portfolio strategy – in this section, you should outline your portfolio composition and allocations and how they will be changing throughout your retirement.

  3. Document retirement assets – collect all the existing accounts and the amount of assets in them.

  4. Specify your spending plan – analyze existing and possible expenditures (travel, medical, etc.) and try to plan how these expenditures could be covered with existing income sources.

  5. Detail how you will address inflation – inflation is always a concern since it deteriorates your purchasing power, moreover, recent economic developments indicate that inflation may rise to a higher level than many are used to. Retirees should address this subject accurately.

  6. Document your cash-flow generating system – this is the most important part of the statement since it focuses on income sources in your portfolio.

  7. Document your approach to withdrawals – you should pay close attention to how much cash you plan to withdraw on an annual basis to make sure you have enough capital for the consecutive years.

  8. Specify whether and when RMDs apply – when relying on retirement saving plans, such as IRA or 401(k), it is necessary to remember that retirees have to make mandatory withdrawals to avoid penalties.

All in all, it is crucial to have IPS and RPS (as a supplement) to maintain your portfolios in accordance with your financial goals and objective, and it is highly recommended to review them on an annual basis to make sure everything sticks to your original plan.

The material on this page reflects PG Capital's professional opinions as of today and is subject to change. The information presented here has not taken into account any particular investor's investing goals or needs, and investors should not base their investment decisions entirely on this material. Past performance is not a guarantee of future results. All investments involve some amount of risk, and investors have different time horizons, goals, and risk tolerances, so consult with your PG Capital Financial Advisor before proceeding.


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