Your Investment Policy
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.