investing-policy-statement

Investing Policy Statement Skill

The biggest investing mistakes are behavioural — panic-selling, chasing, tinkering. A personal **Investing

Policy Statement** is the rulebook you write while calm, to follow when you're not. This skill drafts one:

goals, risk tolerance, a target asset allocation, and the contribution/rebalancing rules that keep you on

track. It's educational and generic — not personalized financial advice or a recommendation of specific

securities.

Required Inputs

Ask for these only if they aren't already provided:

• Goals & time horizon — what the money is for and when it's needed (retirement in 25y, house in 5y).
• Risk tolerance — how they'd react to a 30% drop; capacity for loss; experience level.
• Current situation — roughly what's invested where, monthly amount to invest, account types available.
• Constraints / values — liquidity needs, ESG preferences, things to avoid.

Output Format

Investing Policy Statement — [name]

1. Purpose & goals — what this portfolio is for, time horizon, target.

2. Risk tolerance & capacity — a plain-language statement of how much volatility is acceptable and why.

3. Target asset allocation — broad asset classes with target % and a tolerance band (illustrative example, to adapt):

| Asset class | Target % | Rebalance band |

|---|---|---|

| Equities (broad, diversified) | % | ±5% |

| Bonds / fixed income | % | ±5% |

| Cash / short-term | % | ±5% |

4. Contribution rules — how much, how often, automated; the order of accounts to fill (e.g. employer-match first, then tax-advantaged).

5. Rebalancing rules — when (calendar or band-triggered) and how.

6. What I will NOT do — the behavioural guardrails (no panic-selling in a downturn, no performance-chasing, no market-timing, no single-stock gambles beyond X% of the portfolio).

7. Review cadence — when to revisit the IPS itself (e.g. annually or on a major life change).

Disclaimer — generic and educational; not individualized advice; consider a licensed fiduciary for personal recommendations.

Quality Checks

• [ ] Allocation is tied to the stated goals, horizon, and risk tolerance — not generic
• [ ] Allocation percentages sum to 100% and include rebalancing bands
• [ ] Contribution and rebalancing rules are concrete (amount, frequency, trigger)
• [ ] The "will NOT do" guardrails address real behavioural traps
• [ ] Diversification is the default; no specific ticker/security recommendations
• [ ] The educational / not-advice nature is stated

Anti-Patterns

• [ ] Do not recommend specific stocks, funds by ticker, or "hot" assets — stay at the asset-class level
• [ ] Do not set an allocation that ignores the stated time horizon (e.g. all-equities for money needed next year)
• [ ] Do not omit the behavioural guardrails — they're the point of an IPS
• [ ] Do not imply guaranteed returns or market-timing works
• [ ] Do not present this as personalized financial advice

Based On

The Investment Policy Statement framework (goals, risk, allocation, rules) used by advisors and DIY investors.