Investment Policy Statement Sample

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An Investment Policy Statement sample is a legal document, usually between the helping investment manager and an investor, documenting the agreements that the both parties come to with regard to financial issues concerning how the invested money is to be handled. This agreement can cover various matters such as how the investment is to be overseen, who will manage the investment, when it is to be invested, how it is invested and what responsibilities the investors have in regards to the invested funds. All of these legal documents are for the most part involved in a business environment and it is often the duty of an attorney to fill out and then file these documents for you. Additionally, these documents must be filed with your local securities regulators and must meet the requirements of the Securities and Exchange Commission.

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What does an Investment Policy Statement Sample entail? In general, an Investment Policy Statement Sample covers the general nature of your relationship with the financial firm that handles your portfolio investments. This involves discussing your goals, objectives, risk tolerance, method of investment, any restrictions you have in place, and what you consider appropriate to protect yourself, your family and your beneficiaries in the event of a loss or damage to your portfolio. The words here are specific to the financial products and accounts you are placing in order to protect your assets and these discussions should take place on a continuous basis over the course of a year rather than at the time of a specific investment.

Once you have established these financial goals and your process for achieving them, this discussion about your portfolio is the next phase. It details all of the strategies and techniques you will employ to accomplish your goals as well as any and all limitations you have placed on your ability to do so. For example, if you have an overall risk tolerance you may have restrictions regarding the type of investment that you can make in a given portfolio. This policy statement can also detail how you personally monitor and control your portfolio, taking into consideration your goals, objectives, risk tolerance, age, and level of experience. All of this will play into the strategies you use to achieve your investment goals.

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An Investment Policy Statement Sample will also explain how and why you will retain these investments in terms of your overall asset allocation strategy. This would include things like how you will select your top stocks, how you will distribute your risk and what you will do with any profits. Ultimately, all of this detail is meant to ensure that you have the best possible asset allocation strategy for you, your family and your overall financial future.

Another important thing to consider with your investment policy statement sample is the portion dedicated to educating you on the process of building your portfolio and the different types of investments you can make. All investments have their own risks and rewards. Understanding these both makes sense and is required. Additionally, it is imperative to be able to anticipate market changes and remain flexible with regard to the investments you choose to add to or subtract from your portfolio. This section should explain things like stock picker software and other types of investing tools you can use to reach your financial goals. Ultimately, this is where you will learn how to build and maintain a solid financial portfolio over the long term.

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The last section of an Investment Policy Statement Sample will describe how you will evaluate your portfolio’s performance. You should include details about how you will evaluate your asset allocation strategy by gauging it against your financial goals and any additional risk factors that are of importance to you. You will need to discuss risk tolerance as well as how you will keep any dividends you receive for your portfolio. Ultimately, being able to discuss all of these aspects of your investment portfolio with your financial advisor is what makes choosing the right one so important.

Many people make the mistake of believing that all investment policy statements are the same. Unfortunately, this is simply not true. Each one has its own set of rules and regulations that you must follow when creating them. For example, some policies may require you to get a minimum number of hours of education before you are able to invest in that asset class. Others may not allow certain types of investments, such as options, bonds, or mutual funds.

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Regardless of what type of policy statements you choose to follow, it is vital that you fully understand them before you put them to use. While it can be easy to assume that you do not need to know any of the details, doing so could prove to be quite costly for you over time. Instead of spending months or years learning how to properly manage your portfolio, you could spend just a few days following the advice outlined in your financial advisor’s policy statements. Not only will you save a great deal of time, but you will also save yourself from costly mistakes.

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