Investment policy statement
Also called: IPS, written investment plan
A short written document recording an investor's goals, target allocation, rebalancing rules, allowed and forbidden investments, and review process.
Its main purpose is behavioural: decisions made calmly in advance guide actions during booms and crashes, when fear and greed are strongest. It should change when the investor's life or goals change, not when markets move.
Example
A one-page statement might say 70% equity within a 65% to 75% range, rebalance yearly if outside the range, no borrowing to invest, and review against a 70:30 blended benchmark.
Learn more in these lessons
- Writing an investment policy statementWhy write an investment policy statement, and what goes in it?
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