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Planning For Your Investments
Part 3 of 3-Part Series

Not all IPS’s are created equal, and as with anything, the more thought which is put into it, the more sound it will be. Such examples included would be asset allocation decisions, risk tolerance, and liquidity requirementswhich provide guidance to the portfolio manager. And it commits you to a long-term strategy, reminding you of the goals while keeping emotions at bay. A solid IPS is the framework which should include the scope and purpose, governance, investment, return and risk objectives, and risk management. There is much more which can and should be included, but these for the cornerstones for the rest to built around.

 

Strategy

Finally, we’re on to the investment strategy for your portfolio. The actual decisions which are going to shape where your money in invested to get you to your goals. Perhaps the most exciting part of the process. Unfortunately, it’s not something which we can discuss for the purposes of this article. The reason being are the two very important tools which were discussed above. The Investor Risk Profile is uniquely yours based on your mindset and financial position, while the IPS is sequentially based heavily on your Risk Profile. The strategy also succeeds the IPS, and again is uniquely yours.

 

It means that it’s something which only can be discussed between you and your portfolio manager, and a sound strategy will take time and effort to create. While most everyone has a Risk Report, in reality, most investors do not have an IPS, and many portfolio managers are included in that. It takes a great deal of thought along with understanding the everchanging market and investment principles to create one, and many are not knowledgeable enough or time willing.

 

Together the Investor Risk Tolerance Report and the Investor Policy Statement are the guide for informed decision-making. They are the main course, if you will, and serve as a map to successful investing. A success which is as you now know, is defined by your goals and guidelines and yours alone.