“In many spheres of human endeavor, from science to business to education to economic policy, good decisions depend on good measurement.” -Ben Bernanke-

Successful investing, like virtually every endeavor, is grounded in a plan. The plan should clearly address the investor’s risk tolerance, time horizon, and objectives – the designated purpose for the funds. The strategy should also help the investors accurately evaluate investment results using an appropriate benchmark.

A well drafted Investment Policy Statement (IPS) provides both discipline and direction. Investors should not invest in a vacuum; they should only invest once a definitive plan is put in place. As Roman Statement, Lucius Seneca, said, “If one does not know to which port one is sailing, no wind is favorable.”

The video below details the importance of having an Investment Policy Statement. It characterizes an IPS as a blueprint for managing risk and reward.

At CAM, we require an investment policy statement for every account we manage. If you have any questions about your IPS, or feel it should be updated to reflect your current financial position or investment objectives, please let us know – we would be happy to schedule a time to talk.

Ben Bernanke is an American Economist and the former Chair of the Federal Reserve