Concept
Written Investment Plan
A written investment plan is a short document, decided in calm times, that states what you invest in, how much goes in each month and what you will do when markets fall, so that your future decisions are already made.
Knowing what to do and doing it every month for thirty years are different skills. Morningstar's yearly 'Mind the Gap' studies keep finding that the average investor earns less than the very funds they hold, because people buy after rises and sell after falls. The gap comes from timing decisions, not from the fund. A written plan attacks the problem at its source by cutting the number of decisions. You choose your funds, your monthly amount and your rules for bad years once, on paper, while you are calm. Then automatic contributions carry out the plan without asking about your mood. Staying invested becomes the default. Changing course means deliberately rewriting a document, and that small piece of friction is often enough to stop a panic sale. The plan is not a forecast. It is a promise from your calm self to your nervous one.
A real-life example
Maya, a 38-year-old nurse in Leeds, writes one page: 80% global index fund, 20% bond fund, £400 by standing order on the 2nd of each month, rebalance every January. She adds one rule: 'If markets fall 20%, I change nothing and reread this page.' In spring markets drop sharply and her app turns red. She rereads the page, sees that the £400 has already gone in, and closes the app. She made the decision months ago.
How to use it
- 1In a calm week, write one page covering which funds you hold, what percentage each gets, how much goes in each month and on which date, and when you rebalance (for example, once a year).
- 2Add your rules for bad times in plain words. For example: 'A 30% fall is normal. I keep contributing, and any change waits 72 hours and a second reading of this page.'
- 3Set up automatic contributions for the day after payday. Review the plan once a year, not on the day the news is loudest.