An investment policy statement serves as a roadmap to an investment portfolio. Author, consultant, and professor Charles Chaffin joined Robert 'Bob' Powell on Decoding Retirement to break down investment policy statements and why they are essential to a successful retirement plan.

Investment policy statement (decoded)

An investment policy statement is a written document that outlines the key guidelines and strategies for managing an investment portfolio. It serves as a roadmap for how the portfolio should be invested to meet the client's goals and objectives. Key elements of an IPS typically include investment goals and objectives; risk tolerance; asset allocation targets and ranges; investment selection criteria; rebalancing policies; performance measurement benchmarks; and monitoring and review procedures.

"You have that plan, and you may even go ahead again and write down, these are the things that could happen along the way," Chaffin explained. "And then when you have that desire to panic, because you will have that desire to panic, everyone's telling you that the sky's falling ... go to that plan and look at those hurdles. Oh, there it is. Yes, it could happen. And it did happen. I'm fine."

Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!

Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds and Alexander Frangeskides.

Find more episodes of Decoding Retirement at https://www.cerveza-artesanal.com/videos/series/decoding-retirement.

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Editor's note: This post was written by Zach Faulds.