INVESTMENT POLICY STATEMENT DUE 11/12

Much of the class discussion the last two weeks revolved around forming an Investment Portfolio and an Investment Policy Statement (IPS).  We would like you to put together your own IPS with a suggested portfolio as follows:

First you should complete the short Risk Tolerance questionnaire, Next, score yourself, using the criteria presented on the handout.  Your score should be your "guide" for your risk utility for the assignment. This should be handed in as part of your IPS.

Next you should complete exhibits 4.1 (simplified Balance Sheet) and 4.2 (simplified Cash Budget). Since this is an exercise to introduce you to how an IPS should be done, you need not divulge your personal financial figures (use fictitious data), if it makes you uncomfortable. The objective is for you to experience the completion of such forms. Hand this in also.

3rd create an Investment Policy Statement.  The IPS should include Objectives (Why do you want to build an Investment Portfolio, What risks are you willing to bear, etc.) and a listing of Constraints. Include the development of your asset allocation strategy – what is the distribution of your investments across different types of assets (stocks, bonds, collectibles i.e. stamps, coins, real estate etc.). What segments will you try to achieve. Explain if you are a trader or investor. What is your timeline?

4th Include your Strategies and Policies for Portfolio Management (self-directed, professionally managed, online broker? Why are you choosing these strategies (explain) Market Timing, and Asset Allocation.

-Any other information you may consider pertinent.

 

You may want to use Section 2.1 and 2.5 from the attached handout, forming an “Investment Policy Statement” as an aid.

We would like it to be 2-3 pages and written at a college level.  We also require that it be typewritten. 

Due November 12th.