List the sections of a personal investment policy statement and say what each one is for.
An investment policy statement (IPS) is a single page that gathers every decision you've made in the course and states, in plain sentences, how you will run your portfolio. It has three parts: what you hold and why, where the money sits and how you take it out, and what you will not do. Write the headings first and fill in the content later.
Farhan keeps seven files in a folder on his laptop: an allocation draft, an index map, a comparison sheet, share class notes, home and currency rules, a crash test and an account map. Each one took him an evening or more. If markets fell 30% tomorrow (an example figure), he would open his broker's app and wouldn't look at any of those files. His planning is done, but it is spread across seven places, and he wouldn't read any of them in a panic. Planning work often ends up spread across many files like this, and an investor who is panicking opens the broker's app. An IPS puts your decisions on one page that you read before you act.
Professional investors such as pension funds write long IPSs. A personal one should be short enough to read on a bad day. A longer IPS gets you nothing extra, because a plan is only useful if you reread it, and you won't reread a long one. One page is enough if each section gets a line or two and the detail stays in the supporting sheets. The IPS points to those files and doesn't copy them. Your comparison sheet, account map and crash test sit behind it as evidence, and the IPS is the summary you read before acting.
Write the page for three readers. The first is you on review day, checking whether anything has really changed. The second is you on the worst day of the next crash, when part of you wants permission to panic, and the page has to talk you out of it in a couple of minutes. The third is a spouse or family member who may need to understand the plan when you aren't there to explain it. Use full sentences that any of the three could follow.
Part 1 is the core of the page. It covers the decisions from modules 1 to 6, with a line or two for each. Nothing in it is new. You copy earlier decisions into one place and add a few words of reasoning for each, so you can see the whole plan at a glance.
It has five sections, in this order:
Goals and horizon: what the money is for and when you will use it. Farhan's first line here says the money is long-term retirement money he won't need for at least 20 years. Target allocation: the one line from lesson 1.4, "Draft your target allocation", together with its bad-year figure. Chosen funds: each index from your index map and the fund that tracks it, plus your share class and currency policy. Rebalancing rule: copied word for word from lesson 6.2. Contribution plan: how much you invest, how often, and where new money goes when the portfolio is off target.
Part 2 comes from module 7. It lists which accounts hold which assets. For example, shares might be held in SRS and in the cash account, with bonds held in the cash account. CPF is either left out or counted, depending on what you decided earlier.
Part 2 also sets the order in which you will draw the accounts down. Write this now, even if withdrawals are many years away, because it prevents costly mistakes, such as taking money from SRS before statutory retirement age when a holding in the cash account would have done. A simple order is enough. For example, you pay emergencies from the emergency fund, take long-term withdrawals first from whichever cash-account holding is above target, and touch SRS only from statutory retirement age.
The will-not-do list is the section most people leave out, and it is the one that proves its worth on a bad day. It lists specific actions you will not take: moves that feel sensible in the moment but wreck a long-term plan. Make each entry concrete, and make each one match a temptation you have actually felt or one the course has shown you.
Typical entries say that you will not stop monthly contributions after a fall, will not buy a fund because it was last year's best performer, will not add a new fund without first writing down why it fits the allocation, and will not move money to cash because of a news headline. Farhan adds a personal entry: "I will not stop investing during a fall." He did exactly that a few years ago and knows it. Lesson 8.2, "Rules for when markets fall and when they boom", turns the most important of these entries into fuller rules.
The skeleton is the IPS headings set out in order before any content is written, so you can see the shape of the page. Before you write any of the content, set yours out.
Start with the three part headings. Under Part 1, write the sections in order: goals and horizon, target allocation with its bad-year figure, chosen funds, rebalancing rule and contribution plan. Under Part 2, write account holdings (including your CPF decision), then withdrawal order. Under Part 3, write the will-not-do list.
Under each heading, one line is enough for now. Lesson 8.4 is where it gets filled in properly.
Write the headings of your own investment policy statement and put one line under each.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).