Why Every Serious Investor Needs an Investment Policy Statement (IPS)
What Is an Investment Policy Statement?
An Investment Policy Statement (IPS) is a written plan that outlines your financial goals, risk tolerance, time horizon, and investment parameters. It’s not just a formality, it’s the compass that guides every investment decision you make.
Think of it as your personal blueprint for building and protecting wealth. Crafted with your input, it ensures your portfolio strategy reflects your life, values, and priorities.
Why an IPS Matters for Long-Term Success
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Without an IPS, portfolios often drift with the markets. Investors may chase performance in good years or panic during downturns. An IPS provides clarity and discipline, ensuring your investments stay aligned with your objectives regardless of short-term volatility.
For advisors, the IPS is also an accountability tool, a shared agreement defining how your money will be managed and the guardrails that will guide every investment choice.
Key Components of an Investment Policy Statement
A well-crafted IPS typically includes:
Background & Goals: Your financial picture, life stage, and investment objectives.
Risk Tolerance & Time Horizon: How much volatility you can accept and how long you plan to invest.
Investment Parameters: Asset classes, strategies, and constraints based on your preferences.
Asset Allocation: The mix of investments that matches your goals and risk profile.
Rebalancing Rules: Guidelines for when and how to adjust your portfolio.
Roles & Responsibilities: Clarity on your advisor’s duties and performance measurement.
A Tool for All Market Conditions
Markets will always rise and fall, but your IPS serves as an anchor. It keeps your strategy intact during turbulent times and prevents emotional, short-sighted decisions.
Whether you’re planning for retirement, building generational wealth, or navigating complex holdings, an IPS ensures your portfolio remains purposeful and disciplined.
Bottom Line:
If you take your wealth seriously, you need an Investment Policy Statement. It’s not just for high-net-worth investors. It’s for anyone committed to achieving long-term financial success.
Build yourself an Investor Policy Statement today!
Take your plans to a whole new level by working with one of our advisors today to craft a new IPS tailored to your needs.
Disclaimer
The views, information, or opinions expressed in the above article are solely those of the author and do not necessarily represent those of any affiliated organizations, institutions, or entities. The article is meant for informational purposes only and should not be considered as professional investment advice. Past performance is not indicative of future results. The stock market is inherently risky, and investors may lose part or all of their investment. The author does not guarantee the accuracy, completeness, or timeliness of the information provided. Any reliance you place on such information is strictly at your own risk. This article contains forward-looking statements and projections that are based on current expectations, estimates, and projections about the stock market and the overall economic environment. These statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. The author is not a licensed financial advisor, and this article should not be construed as a recommendation to buy, sell, or hold any investment or security. Before making any investment decisions, readers should consult with a qualified financial advisor to discuss their individual situation and risk tolerance. The author may hold positions in some of the stocks or financial instruments mentioned in this article. However, this does not influence the objectivity of the content presented. This article is protected by copyright laws and may not be reproduced, distributed, transmitted, displayed, published, or broadcast without the prior written permission of the author. By reading this article, you acknowledge that you have read and understood this disclaimer and agree to hold the author and any affiliated parties harmless from any losses, damages, or consequences resulting from the use of information contained within.
