TCMC Proposed Investment Plan
As of 12/31/17, TCMC had approximately $75,000 in equity (assets minus liabilities). For the past several years this equity has been sitting in a bank savings account or certificates of deposit (CD’s).
The Board decided that the money should be invested to keep up with inflation and to build some additional equity that could support TCMC operations or future building needs.
The following are the goals of the plan.
1. Protect value of assets against inflation
2. Grow our investments while mitigating risk
3. Eventually provide more scholarships and reduced fees
4. Protect TCMC’s mission and provide some financial security
The Board and Executive Director determined our investment time frames, goals and risk tolerance. Based on the fact that we cannot currently afford a building that our members would like, and that we don’t typically need to use our savings for operations, we decided our time frame was a least 5 years. We defined our risk tolerance in terms of the maximum yearly loss were willing to tolerate (25%) and the maximum number of years with a portfolio loss (3). We also had a goal to invest in socially responsible companies through low fee mutual funds and not buy individual stocks. Finally, we wanted to have a diverse portfolio.
We gave this information to a friend of Tucker (Joel) who works as an analyst on the MIT endowment fund. He provided advice about how to invest our funds in order to meet our goals and stay within our risk tolerance, free of charge. As a result we developed the following plan.
Keep $15,000 in emergency funds outside of our investment portfolio.
Invest in the stock market in equal installments throughout the next year to mitigate the risk of investing at the top of the market.
Buy and hold and not try to time the market.
Investment Portfolio Asset Allocation - Approximately $60,000
30% - Vanguard Social Index Mutual Fund - screened for socially responsible companies
30% - Vanguard International Stock Index mutual fund or a low fee international socially screened fund if we can find one
20% - Vanguard short term government treasury bond mutual fund
20% - Bank CD’s, preferably at a local credit union
The portfolio will be rebalanced once per year to maintain these ratios