Why do we do this (write it down)?

A written Investment Policy Statement (IPS) helps guide you through emotional ups and downs. Emotional approach to the market often leads to buying high and selling low (note: this means selling for a loss!!).

Here’s the important point … when things get choppy in the markets … READ IT.

That is why it is put into writing … so you can remind yourself what went into baking your portfolio in the first place.

THEN, after reading it, if something has changed (other than your emotions), an update may be considered … and then WRITE IT DOWN again so you remember what the update is supposed to do.

This is the only way you can accurately remember rational thought when emotions begin to take hold.

This article in the Wall Street Journal provides more insight into why you should do this.

PS. All my clients have a written IPS on a bi-annual review cycle.

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

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