The Discerning Investor by Julie Jason

Creating a Map for Your Investments

When I speak with investors, whether they invest on their own or with the help of financial professionals, I’m always curious about how they monitor progress. How do they know they are on track? How do they judge performance? Are they happy with the results?

Some tell me they only have time to quickly compare their current brokerage statement balances with earlier balances to get a sense of performance. Being ahead is better than being behind.

That leaves me wondering even more. Is that enough? To give you context, some (not all) financial firms do report performance to their clients in a way that addresses goals and how they are being met on a risk-adjusted basis. That is, they report to clients on a regular basis on progress being made or not made and the risk taken on to achieve that progress.

Before one can do that, goals need to be identified. Very simply: What are your goals, and what’s the path to reaching them?

If you are not making that type of assessment, I challenge you: It may be time to redefine your job as an investor to include a strategic plan that you can use to measure your progress toward one or more specific goals.

In the financial industry, that is achieved through an investment policy statement, or IPS.

Very simply, an IPS is a statement of goals, how you plan to reach them and how you will measure progress to make sure you are on track.

While an IPS is usually a document that an investment firm provides clients, there is no reason you can’t have one for yourself if you are investing on your own. Everyone who wants to be a successful investor needs to have a formal or informal IPS.

To get started on your own, I recommend Morningstar’s Investment Policy Worksheet, which you can find online at

The worksheet takes you through six sections: 1) a summary of where you are currently, including how much of a loss you can “accept” over different time periods; 2) your financial goals; 3) your investment philosophy, which goes into what is important to you as an investor and your assessment of risk; 4) your philosophy about taxes; 5) your investment selection criteria; and 6) your monitoring procedures.

Yes, monitoring comes at the end, after considering all the other factors that drive the success or failure of an investment program, including the very important element of risk. How else could you possibly know if you are on track?

Returning to my discussions with investors, over the years, I have found that when talking about performance, risk is not mentioned. Someone who goes through the IPS process will need to address risk and have a sense of what to do in a rapidly declining market such as we experienced this year, when the S&P 500 Index fell 34% from Feb. 19 through March 23.

To learn more about the IPS, an excellent publication comes from the CFA Institute. The institute is a nonprofit whose goal is to build a better world for investors. The publication, “Elements of an Investment Policy Statement for Individual Investors,” is available for free online at

On another note, no matter where you are located, I invite you to join me at a free virtual presentation, “Investing in a Coronavirus Stock Market,” on Wednesday, Oct. 28, at 10:00 a.m., sponsored by the Greenwich (Connecticut) Library. To register, go to or contact Yang Wang, 203-622-7924, This is part of the library’s financial and investment programs.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments ( Please visit