Investment Policy Statement

Is now a good time to update your investment policy statement? You should review it every 3 years or more often if there are major changes in your situation.

Running your portfolio without an investment policy statement is a little like trying to build a house without any blueprints. 

Your IPS needn’t be complicated, but it should convey the basics of what you’re trying to achieve:

• Your financial goals and expected duration/completion,
• Your asset-allocation policy (mix of stocks, bonds, etc),
• Your criteria for selecting these investments,
• And the specifics of how—and how often—you’ll monitor the whole thing. 

If you already have an IPS, it’s a good time to review it to make sure that it syncs up with your current situation and reflects your current belief system and investment approach.

• Retirees should go the extra step to create a retirement policy statement that addresses the specifics of their spending strategies (eMoney):
• Your targeted income needs and how much of them will be covered by pensions and Social Security;
• Your portfolio spending rate and the extent to which it might change over time;
• And whether you’re using an income-centric, total-return, or blended approach.