Part 16 of 43 in How to Invest Your Money: Lessons from the World’s Greatest Investors, Adapted for the Indian Investor← Part 15Part 17 →
This chapter provides practical worksheets and checklists for organizing an investment plan and reviewing individual equity ideas. It helps investors define goals, manage allocation and risk, assess annual progress, and examine businesses before investing.
- Set goals, time horizons, target allocations, rebalancing bands, position limits, review frequency, and emergency fund size.
- Complete the Investment Policy Statement once and revisit it annually.
- Review contributions, changes in investment theses, risk levels, lessons, and one process improvement each year.
- Before buying direct equity, assess the business, competitive advantage, management, balance sheet, intrinsic value, and thesis risks.
- Proceed only when the answers are clear and the position size is appropriate.
Investment Policy Statement Template: Goals (education, retirement, other), time horizons, target allocation (equity / debt / gold / other), rebalancing bands, maximum single-stock or single-fund weight, review frequency, and emergency fund size. Complete this once and revisit annually.
Annual Review Questions: Did I follow my contribution plan? Has any holding’s fundamental thesis changed? Is my overall risk level still appropriate given changes in income, expenses, or family situation? What did I learn this year? What one process improvement will I make?
Direct Equity Checklist: Can I explain the business in two sentences? What is the durable competitive advantage? How has management allocated capital over the past decade? Is the balance sheet conservative? What is a reasonable range of intrinsic value? What would invalidate the thesis? Only proceed if answers are clear and the position size is appropriate.
Frequently asked questions
What should an Investment Policy Statement include?
It should include goals, time horizons, target allocation, rebalancing bands, maximum single-stock or single-fund weight, review frequency, and emergency fund size.
How often should I review my Investment Policy Statement?
Complete it once and revisit it annually.
What questions should I ask during an annual investment review?
Ask whether you followed your contribution plan, whether any holding's fundamental thesis changed, whether your risk level remains appropriate, what you learned, and what process improvement you will make.
What should I check before investing in a direct equity?
Check whether you can explain the business, identify its durable competitive advantage, assess management's capital allocation, evaluate the balance sheet, estimate intrinsic value, and identify what would invalidate the thesis.