Investment Plan Statement for the PP

[TripleB]

Bogleheads came up with an interesting tool to keep their investment on track. It's an IPS, or investment plan statement. The idea is that you spend a lot of time researching what you feel is appropriate, write it out like the Constitution of the US, and later refer to the IPS when you have to make decisions on the portfolio. This prevents you from:

A) Forgetting what you initially decided based on your research
B) Making emotional decisions
C) Getting off track

With respect to the PP, it seems like there may not be a need an IPS because the 4x25 and 15/35 seems simple enough. Here are some considerations that you should make to include in an IPS with respect to the PP:

1) What percentage of gold can be ETFs, and what percentage must be physical coins?

2) Where will you store gold coins?

3) Which type of coins will you use (weight/brand?)

4) Do you have a maximum spread on trading gold coins where you will switch to ETFs (i.e. if the spread on gold coins becomes ridiculous like 10%+ will you continue to use them or go to ETFs?)

5) What will you allow for the cash portion? IBonds/EEBonds? FDIC/NCUA High Yield Savings? Annuities under the state-guarantor maximum protected amount? Short Term Treasury Bond Fund with 2 to 3 year maturities?

6) If you do allow non-TBills for cash, do you have maximum percentages you can use? i.e. IBonds may be used as long as IBonds issued within 12 months (and thus are non-redeemable for any reason) do not exceed 50% of the cash portion.

7) What stock indices will you use? SP500? TSM? Mix some international in there?

8 ) If you mix in Small Cap, SCV, or International, what ratio will you use to your primary stock index? i.e. 50/50 TSM/International, etc?

9) How will your ratio of stock indices change as the market cap of the US changes? Will you fix your international portion to 20% regardless of US market cap, or will you  set it to global market cap, currently at around 50%?

10) What will you allow for the bond portion? TLT, VUSTX, Individual 30 Year Treasuries, other?

11) What ratio of the above will you allow? i.e. VUSTX at 20% of the bond allocation to allow ease of rebalancing while retaining sufficient average maturity.

12) Where do you intend to keep the PP? IRA, 401k, HSA, Safe Deposit Box, Taxable Accounts?

13) What is your preference order of adding money? i.e. first money goes to 401k up to employer match, then IRA, then finish 401k, then X, etc.

14) How will you allocate the assets within those above accounts (i.e. bonds in tax shelters, first, gold in taxable first, etc)?

15) How will you add new money to the PP? Several "Standard" options here: (a) always to cash first, until a rebalancing band is hit (b) to the asset that is currently the smallest portion of the PP (c) to the asset that has fallen most dramatically in recent time frame (if so, what is the time frame?)  ?

16) How will you withdraw money from the PP as needed? (a) always from cash first, until a rebalancing band is hit (b) from the asset that is the highest portion of the PP (c) from the asset that has increased the most dramatically in recent time frame of X.

17) How often will you reanalyze the PP concept and what events must occur for you to institute a "Plan B"? i.e. a discovery is made in "alchemy" to create gold from lead. The US defaults on its dead and bond values fall 90%. etc.

18) What is the "Plan B"? Does Plan B change based on what caused the PP failure (i.e. if gold can be made from lead, then recreate a new PP with a new metal such as Platinum that people now accept as the "new gold")?

19) If you have a spouse, include instructions to follow upon your death.

20) How often will you check the PP for rebalancing purposes? Daily, weekly, monthly, annually, etc?

21) Do you have a VP? If so, what percentage of your overall portfolio is it? How will you add new money to the VP to isolate it from PP? How will you withdraw money from the VP?

22) If you're saving for a house or another large purchase, do you keep it in the PP or in cash? Does it matter on how big the purchase is relative to your PP and how far into the future the purchase is? If so, how? i.e. Large Purchases that represent more than 20% of the PP and will occur under 3 years in the future will be isolated from the PP and kept in cash.

23) What if the US Treasury stops issuing 30 year bonds? What if they start issuing 40 year+ bonds? If you have a heads up that this will be the last 30 year auction, do you sell all your bonds regardless of maturity, and repurchase new 30 year issues in hopes they will change their mind?

24) Do you have a separate emergency fund? Perhaps you want an emergency fund only while your PP is small. i.e. you need $10k to live for 6 months. So until your total portfolio hits $20k, you maintain a separate emergency fund.

There's a lot of possibilities to consider in an IPS even for something as simple as the PP. My goal is to hear others' thoughts that may include areas that I didn't write above. Then I'd like to create my personal IPS, that is easy to follow and read. For example:

I. Introduction
Executive Summary of the PP and plan

II. Assets Held
A) Stocks
1-stocks will be 50% TSM, 50% International
2-etc.

B) Bonds
1-Bonds will consist of 30 year treasury bonds that are held until 20 years from maturity

III. Account Types
A) 401k
B) IRA
etc.

IV. Contributing Money
Which assets first? Which locations first?

V. Withdrawing Money
Which assets first? Which locations first?

VI. Rebalancing

VII. Contingency Planning
Plan B discussion. Events that may trigger it, and what Plan B is

VIII. Fundamentals of the PP
This section will explain why the PP works, and perhaps answers to frequently asked questions such as why Harry Browne preferred one thing over another. Craig's blog has just about all of it, so I may just use that and condense it for my IPS.

My reasoning for creating a detailed IPS is that I have done extensive research on the PP over the last few years, and the material is fresh in my mind. I don't intend to check the PP forums several times per day, for the rest of my life, in perpetuity. I will continue blogging and checking sporadically to assist others by answering questions and giving my thoughts, and perhaps learning about new developments such as lower ER, higher duration bond ETFs.

I look at the IPS as my thesis on a Masters program. I took the time to do the research, now it's time to write it out so I can refer to it forever, even after time passes and I forget my research.

I do not plan to share my finalized IPS for personal security reasons, however I will share the template I create.