Investment Policy Statement
- An investment policy statement (IPS) is a statement that defines one’s general investment goals and objectives.
- It describes the strategies the investor will use to meet those objectives and will include details on subjects such as asset allocation, risk tolerance, and emergency funding.
- An IPS provides the foundation for all future investment decisions and can serve as a compass to ensure an investor stays on course during short-term swings in the market.
- It can help one avoid common behavioral mistakes, make decisions with a cool head, and protect an investment portfolio from excessive emotional reactions.