Why Write an Investment Policy Statement (IPS)?

Why write an Investment Policy Statement (IPS)?  To start, an IPS helps ensure you and your investment advisor remain on the same page. An IPS is a written financial plan focused on investment strategy. There are six key elements that should be included in an IPS written for an individual investor:

  1. Scope and Purpose
  2. Risk and Return Objective
  3. Time Horizon
  4. Tax Considerations
  5. Expected Withdrawals and Deposits
  6. Investment Preferences

There are many benefits of having a well-written, personal Investment Policy Statement and here the CFA Institute identifies two essential reasons to have one…

Perhaps most importantly, the IPS serves as a policy guide that can offer an objective course of action to be followed during periods of market disruption when emotional or instinctive responses might otherwise motivate less prudent actions. The IPS is a highly customized document that is uniquely tailored to the preferences, attitudes, and situation of each investor.

Download an example of a concise, yet effective IPS. Call the pros at Successful Portfolios at (727) 744-3614.  We can help you create your own custom written Investment Policy Statement.

For further reading we recommend the CFA Institute’s Elements of an Investment Policy Statement for Individual InvestorsDownload ↓

CFA Elements of an IPS