Investment Policy Statement Montreal Tulett Matthews

Investing Pitfall #1: Lack of an Investment Policy Statement (IPS)

The lack of a clear vision is the root cause of the majority of challenges faced by investors. Many people feel confused or apprehensive when it comes to their portfolio – and rightfully so. They’re bombarded with all kinds of information and they don’t know what it means for them.

Investing is a daunting task and for many people it is uncharted territory. An investment policy statement (or investment plan) acts as a map to guide you along your investment journey by taking the following into account:

◆ your long-term objectives
◆ your time horizon
◆ your saving and spending rates
◆ diversification decisions for your portfolio
◆ your tax consequences
◆ associated risks with your portfolio strategy
◆ rules of engagement for dealing with industry professionals

Think of these as landmarks that your IPS will help you navigate. By putting your plan in writing and linking it with your investment philosophy, you create a blueprint for your investments that will help guide you along the path to achieving your goals. A good IPS highlights how all the moving parts work together and elaborates on the decision-making process used to execute the investment philosophy for you and your family.

Watch our video “Our Investment Philosophy” below for more details:

We work with plans when we build our homes or cottages; successful entrepreneurs and business owners have a vision and a plan; companies and organizations have them as well.

So should your investments.

The world of investing is always changing, but the approach detailed in this book proves that a well-constructed and disciplined plan will allow you to be well-positioned during good times and bad. Instead of worrying about the challenges presented in the short term, a sound investment plan will help you become better informed about the relationship between returns, risk, and time horizons. It will shift the focus to the proper management of your long-term portfolio.

By prioritizing the long-term health of your investments, you’ll be better positioned to weather challenges and common pitfalls in the short term. An IPS is such a key component of success that I never work without one when serving my clients.

If you don’t have an Investment Policy Statement in place, it’s not too late. The very first step is to clarify your long-term objectives.

Download This Goal Worksheet to Get Started

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