What’s going to happen next on the investment scene? No one knows for certain. In fact, if there’s one sure thing, it’s that you can expect the unexpected.
For instance, events unfolding in the far corners of the world could affect your portfolio. Political unrest. Natural disasters. Deepening recession. Runaway inflation. Corporate scandals. They’ve all occurred before and will happen again.
So how do you protect your assets against a potential calamity? If you don’t have an investment policy statement (IPS) in place, it’s a good time to develop a game plan to address your needs. If we have already helped you create an IPS, rely on it to ride out the hailstorms.
The IPS outlines general investment goals and objectives, and, typically, it describes an asset allocation designed to meet those goals. It may also emphasize strategies tied to your risk tolerance, liquidity requirements, and retirement needs. Finally, the IPS may delve into other financial areas, including your estate plan.
The principal reason for developing a long-term investment policy, in writing, is to protect your portfolio from ad-hoc revisions during times of market turmoil and assure that your investments stay true to your long-term goals. Of course, an IPS isn’t a panacea for all possible ills. But it will help you be better prepared when the unexpected happens…and it will.