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Investment Policy Statement Prepared For: Mr. and Mrs. Bob Smith December 9, 2011, Home Office 1900 S. Highland Ave. Suite 100 Lombard, IL 60148 pH 630.873.8520 fax 630.873.8536 Skokie Office 4709

How to fill out investment policy statement

How to fill out an investment policy statement:

1. Start by gathering information: Before filling out an investment policy statement (IPS), gather all relevant financial information such as your current investments, risk tolerance, financial goals, and time horizon. This will help you craft a comprehensive and tailored IPS.
2. Define investment objectives: Clearly outline your investment objectives in the IPS. These objectives can include goals such as wealth preservation, capital appreciation, income generation, or a combination of these. Be specific and realistic about your expectations.
3. Determine risk tolerance: Assess your risk tolerance level, which refers to your ability and willingness to bear investment risks. Consider factors such as your age, financial situation, investment knowledge, and comfort with market volatility. This will help you establish appropriate asset allocation strategies within your IPS.
4. Establish asset allocation: Based on your defined investment objectives and risk tolerance, determine the appropriate allocation of assets across different investment classes such as stocks, bonds, real estate, cash, and alternative investments. Consider diversification to spread risks and reduce potential volatility.
5. Set investment guidelines: Establish specific guidelines and constraints for your investment portfolio within the IPS. This can include acceptable levels of risk, target return expectations, liquidity requirements, and any limits on certain types of investments (e.g., no investing in certain industries or companies).
6. Define investment strategy: Outline the overall strategy you will employ to achieve your investment objectives. This can include a specific investment approach (e.g., value investing, growth investing), the use of passive or active management, and any specific investment vehicles or securities you plan to use.
7. Document monitoring and evaluation: Clearly state how you will monitor and evaluate your investment portfolio's performance in the IPS. This may involve regular reviews, benchmark comparisons, periodic rebalancing, or seeking professional assistance. Regularly review your IPS to ensure it remains aligned with your evolving financial circumstances and goals.

Who needs an investment policy statement:

1. Individual investors: Any individual planning to invest their personal wealth can benefit from having an investment policy statement. It helps them clarify their financial goals, set a proper asset allocation, and maintain a disciplined investment approach.
2. Institutional investors: Institutional investors, such as pension funds, endowments, and foundations, often have extensive investment portfolios. An IPS helps these organizations define their investment objectives, risk tolerance, and overall investment strategy. It also aids in providing transparency and accountability to stakeholders.
3. Financial advisors and portfolio managers: Investment professionals use an IPS to guide their decision-making process on behalf of their clients. It serves as a written agreement between the advisor and the client, ensuring that investment strategies align with the client's goals and risk tolerance. It also helps build trust and transparency in the advisory relationship.

In conclusion, filling out an investment policy statement involves gathering information, defining objectives and risk tolerance, establishing asset allocation, setting investment guidelines and strategy, and implementing a system for monitoring and evaluation. Both individual and institutional investors, as well as financial advisors, can benefit from having an IPS in place.

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What is investment policy statement?

An investment policy statement is a document that establishes the investment guidelines and objectives of an individual or organization.

Who is required to file investment policy statement?

Individuals or organizations with investment portfolios are typically required to file an investment policy statement.

How to fill out investment policy statement?

To fill out an investment policy statement, one must outline their investment goals, risk tolerance, time horizon, and asset allocation strategy.

What is the purpose of investment policy statement?

The purpose of an investment policy statement is to provide a roadmap for investment decisions, ensure consistency in investment strategies, and align investments with goals and objectives.

What information must be reported on investment policy statement?

Information such as investment objectives, risk tolerance, asset allocation strategy, investment guidelines, and monitoring procedures must be reported on an investment policy statement.