If you read any great investing books  youll come across an extended investment checklist. Lynch had his simple philosophy. Fisher had fifteen points. And Graham had his portfolio policy and value formula. Even Buffett and Munger talk about keys to a great company.

The idea of a checklist isnt new. Its used by a number of professions, like engineers, pilots, and doctors, to prevent mistakes. Theres a reason every flight seems like a ritual. Both pilots and flight attendants go through a checklist before, during, and after each flight.

As a passenger it seems trivial, but they do it for a reason. It works. It makes sense too. Lives are on the line and anything that prevents errors and mistakes, inevitably saves lives. And all because of a simple checklist.

You can apply the same concept to your portfolio and investments.

An investing checklist forces you to stay in your comfort zone, stick to your guidelines, and make methodical thought out decisions. It becomes your process for investment selection lists what you like and should avoid. It is your research process. It is a reminder of past mistakes to avoid. It keeps your portfolio inline with your long-term investment plan. It simplifies your investment process.

With money on the line, being thorough helps reduce risks, mistakes, and losses. It should keep you honest about investment ideas. In doing so, it should increase performance. Though, I wont guarantee it. But if youre using your checklist correctly, fewer mistakes lead to fewer losses and better performance. So you do the math.

Investment Checklists

Mistakes are a big reason investors fail. Which should be obvious. Its how we learn from those mistakes that set us apart. The second biggest is not having a plan. You get around both with a solid checklist.

Here are two investment checklists to get you started. Understand these are generic templates for a number of reasons. But mainly, not knowing your strategy or selection process makes it hard to be specific. So please remove what you dont need and add your own experiences, requirements, and strategy. It will only help your investing success in the long run.

Portfolio Checklist

Running through a portfolio checklist is a great way to make sure your investments stay aligned with your goals. It keeps your portfolio performing optimally and without extra risks. Its perfect for quick quarterly checkups and complete annual reviews.

• Have your goals changed?
• Do your investments still meet your requirements?
• Do your investments align with your goals, risk aversion, and age?
• Is your asset allocation out of whack? Is it time to rebalance ?
• Is it a diversified allocation ?
• Is it a tax efficient allocation ?
• Do the mutual funds live up to its stated investment goals?
• Do the index funds and ETFs perform up to the underlying benchmark?
• Have the fund expense ratios changed? More expensive? Less expensive?
• Is there an alternative lower cost fund available with a similar or better performance history and risk profile?
• Have economic changes affected your risk level?
• Has your investment time horizon  changed?
• Do those economic changes call for an allocation adjustment?
• Have those changes provided a short-term opportunity?

Stock Checklist

Your stock checklist will solidify your predetermined requirements. It forces you to follow through on all the research. This way you dont overreach for a stock because your neighbor recommends it and one metric looks convincing. When you build your list, it can be as simple as what makes a great stock  or an extension of your favorite stock screen. Again, this checklist is far from complete. Youll need to make changes and fill the rest.