DECA Financial Consulting Complete Practice Exam

An investment policy statement (IPS) is a crucial document that defines and outlines an investor's goals, risk tolerance, investment strategy, and other relevant criteria for managing their investment portfolio. The primary purpose of an IPS is to provide a clear framework that guides investment decisions and ensures that the investor's portfolio aligns with their financial objectives, time horizon, and risk appetite. By articulating specific goals and strategies, the IPS serves as a roadmap for making informed investment choices, and it can help prevent emotional decision-making during market fluctuations.

The IPS may also include guidelines for asset allocation, investment selection criteria, and performance evaluation metrics, thereby facilitating a disciplined approach to investing. It is a vital tool for both individual investors and financial advisors as it helps to maintain consistency in investment strategies over time.