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Investment Policy Statement Template
A free investment policy statement (IPS) template for individual investors: 13 fill-in sections for your goals, time horizon, return objective, risk tolerance, liquidity, tax, constraints, target allocation with min/max bands, rebalancing rule and review date, plus an Allocation sheet that shows drift and the dollar trades that bring each asset class back to target.
Use it in Google Sheets: choose File → Import → Upload in Sheets and pick the .xlsx, or upload it to Google Drive and open it with Google Sheets. The Word file opens in Google Docs the same way. No sign-up, no email. Formulas are plain IF, SUM, COUNTIF, RATE and EDATE.
| Asset class | Target | Band (min–max) | Current value | Current % | Drift (pp) | Status | Trade to target |
|---|---|---|---|---|---|---|---|
| US stock index funds | 45.0% | 40.0%–50.0% | $61,200 | 53.2% | +8.2 | Rebalance | Sell $7,200 |
| International stock index funds | 20.0% | 15.0%–25.0% | $19,400 | 16.9% | -3.1 | Inside | Buy $4,600 |
| Bond funds (investment grade) | 30.0% | 25.0%–35.0% | $30,100 | 26.2% | -3.8 | Inside | Buy $5,900 |
| Cash / money market | 5.0% | 0.0%–10.0% | $4,300 | 3.7% | -1.3 | Inside | Buy $1,700 |
| Total | 100.0% | $115,000 | 100.0% | 1 outside | net $5,000 |
What an investment policy statement is
An IPS is a short written policy for your own money. It says what the money is for, how much risk you accept, what you hold, and the rules you follow when markets move. You write it once, while calm, and review it on a schedule.
The template follows CFA Institute's "Elements of an Investment Policy Statement for Individual Investors" (May 2010). It describes the IPS as something that "serves as a strategic guide to the planning and implementation of an investment program." It also says an IPS can offer "an objective course of action to be followed during periods of market disruption."
The same CFA paper warns that IPS templates "almost inevitably sacrifice consideration of factors that are highly relevant to the investor." Treat this file as a structure and a checklist. Add whatever is specific to you, and leave out what does not apply.
What's inside the files
| Tab / file | What you type | What it calculates |
|---|---|---|
| Start here | Nothing | Steps, colour key, limits, sources, disclaimer |
| IPS | 13 sections in your own words, plus a few numbers: goal amount and date, current value, yearly contribution, loss limit, known withdrawals. Dropdowns for rebalancing method and review frequency. | Years to goal, return needed to reach the goal, your loss limit in dollars, withdrawals as % of the portfolio, next review date. Section 10 copies targets and bands from Allocation. |
| Allocation | Asset class, target %, band, current value (10 rows). Band type, new cash, minimum trade size. | Min %, max %, current %, drift in percentage points, Inside/Rebalance status, target value, trade to target, Buy/Sell/Hold. Checks: targets = 100%, classes outside band, largest drift, trades net to new cash. Bar chart of target vs current. |
| Example IPS / Example Allocation | Already filled | A finished IPS for a fictional person, "Jordan Sample", with 4 asset classes |
| Word version (.docx) | Print or type into the answer column | Same 13 sections and an allocation table with Target, Min, Max and Benchmark columns. Calculations stay in the Excel file. |
The 13 sections and where they come from
| # | Section | What you write | Source |
|---|---|---|---|
| 1 | Scope | Who the IPS is for, which accounts it covers, who decides, trades and monitors | CFA 1b, 1c, 2a |
| 2 | Goals | Purpose of the money, target amount and date, other goals | CFA 3a |
| 3 | Time horizon | How long you will invest, and how long before you judge results | Investor.gov; CFA 3d |
| 4 | Return objective | Current value, contributions, the return needed, nominal or after inflation | CFA 3b |
| 5 | Risk tolerance | Largest 12-month fall you could live with, in % and dollars, and what you will do | Investor.gov; CFA 3c |
| 6 | Liquidity | Emergency fund, known withdrawals, how they are funded | CFA 3d |
| 7 | Tax | Account types, what is held where, tax rules you follow | CFA 3d; FINRA |
| 8 | Constraints | Legal limits, margin, single-holding limit, exclusions, foreign assets | CFA 3d, 3e |
| 9 | Philosophy | How you invest, permitted asset classes and a benchmark for each | CFA 3b, 3e |
| 10 | Target allocation | Target % and min/max band for each class | CFA 3b |
| 11 | Rebalancing rule | Calendar, bands or both; new cash first; minimum trade | CFA 4c; Investor.gov; FINRA |
| 12 | Review | Review frequency, next date, events that trigger an early review, what you measure | CFA 2b, 4a, 4b |
| 13 | Acceptance | Signatures and dates | CFA 1c |
CFA's paper is written for advisers and their clients, so parts of it (proxy voting, securities lending, external managers) are left out here. Add them if they apply to you.
How to use it
- Open Example IPS first to see how a finished one reads. Then switch to the IPS tab.
- Fill in sections 1–9 in plain words. Write "none" where a field does not apply, so you know it was considered.
- On Allocation, list your asset classes, a target % for each (they must add up to 100%) and a band. Pick the band type in B3.
- Add up the current value of each class across every account listed in IPS 1.2 and type it in column F. Status shows Inside or Rebalance.
- If you are adding money, type it in B4. Target values and trades then include it. A withdrawal is a negative number.
- Finish sections 11–13, sign and date. Put the date from IPS 12.2 in your calendar.
Time horizon, risk tolerance and allocation: what the regulators say
The SEC's Beginners' Guide to Asset Allocation, Diversification, and Rebalancing (Investor.gov) defines the two inputs that sections 3 and 5 ask for:
- Time horizon: "the expected number of months, years, or decades you will be investing" to reach a goal.
- Risk tolerance: "your ability and willingness to lose some or all of your original investment" in exchange for greater potential returns.
It also says: "There is no single asset allocation model that is right for every financial goal." That is why this template has no default allocation. The example uses made-up targets only to show the formulas.
For section 10, CFA's paper says an asset allocation policy should "designate target allocations to each asset class, with allowable ranges around the targets." The Allocation tab turns those ranges into a min and max for each class.
Rebalancing: calendar, bands or both
Investor.gov: "Rebalancing is bringing your portfolio back to your original asset allocation mix." It describes two triggers:
- Calendar: at a regular interval, "such as every six or twelve months."
- Threshold: when an asset class moves "more than a certain percentage that you've identified in advance." These are the bands in the Allocation tab.
FINRA adds that "there's no official timeline that determines when you should rebalance your portfolio," and suggests considering it as part of an annual review. FINRA lists three ways to rebalance: direct money to the lagging classes, put more of your new contributions into them, or sell part of the classes that have grown and reinvest. The new-cash cell (B4) supports the first two.
Costs matter. Investor.gov says to check whether your method "will trigger transaction fees or tax consequences." FINRA notes that selling winners in a taxable account "could result in your having to pay capital gains taxes." IPS section 7 is where you write your rule, for example rebalancing inside tax-advantaged accounts first.
CFA's rebalancing element (4c) adds one more option: "If the policy is not to rebalance, this policy should be documented in the IPS." Its sample IPS also skips small trades: a rebalancing trade "less than $50,000" is deferred. The "Skip trades smaller than" cell (B5) does the same for whatever amount you choose.
Two kinds of band
| Band type (cell B3) | Band typed | On a 30% target | On a 5% target |
|---|---|---|---|
| Percentage points | 5% | 25%–35% | 0%–10% |
| Relative % of target | 20% | 24%–36% | 4%–6% |
Percentage-point bands are wide for small classes. Relative bands are tight for small classes. The file supports both; which one fits is your decision.
The formulas, explained
Exact formulas from the Allocation tab (row 8 shown; asset rows are 8–17 and totals are in row 18). B3 = band type, B4 = new cash, B5 = minimum trade.
| Field | Formula |
|---|---|
| Min % (D) | =IF(B8="","",IF($B$3="Relative % of target",MAX(0,B8*(1-C8)),MAX(0,B8-C8))) |
| Max % (E) | =IF(B8="","",IF($B$3="Relative % of target",MIN(1,B8*(1+C8)),MIN(1,B8+C8))) |
| Current % (G) | =IF(OR(A8="",$F$18=0),"",F8/$F$18) |
| Drift (H) | =IF(OR(G8="",B8=""),"",G8-B8) (percentage points) |
| Status (I) | =IF(A8="","",IF(B8="","Set target",IF(G8="","",IF(OR(G8<D8,G8>E8),"Rebalance","Inside")))) |
| Target value (J) | =IF(B8="","",B8*($F$18+$B$4)) |
| Trade to target (K) | =IF(J8="","",J8-F8) (positive = buy, negative = sell) |
| Action (L) | =IF(K8="","",IF(ABS(K8)<$B$5,"Hold (small)",IF(K8>0,"Buy","Sell"))) |
| Targets = 100% check | =IF(ROUND(B18,6)=1,"OK","Targets add to "&TEXT(B18,"0.0%")&" - must be 100%") |
| IPS 4.3 return needed | =RATE(years, -contribution, -current value, goal), wrapped in IF/IFERROR |
| IPS 12.2 next review | =EDATE(date prepared, 3, 6 or 12) depending on the review frequency |
Trade to target shows the full move back to target for every class, even ones inside their band. Act on it only when your rule in IPS section 11 says so.
Worked example from the sample data
All of this is fictional. "Jordan Sample" is not a real person and the targets are not a recommendation.
Drift and status
The four classes add up to $115,000. US stock funds hold $61,200, so the current weight is $61,200 ÷ $115,000 = 53.2%. The target is 45% with a 5-point band (40%–50%), so drift is +8.2 points and the status is Rebalance. The other three classes are under target by 1.3 to 3.8 points but still inside their bands.
Trades with new cash
Jordan adds $5,000, so the new total is $120,000. The US target value is 45% × $120,000 = $54,000, so the trade is $54,000 − $61,200 = sell $7,200. The other trades are buy $4,600 (international), buy $5,900 (bonds) and buy $1,700 (cash). They net to +$5,000, the new cash, which the check cell confirms.
New cash alone would not fix this one. With $5,000 added and nothing sold, US stock funds would be $61,200 ÷ $120,000 = 51.0%, still above the 50% max. Getting back inside the band by buying only would need a total of $61,200 ÷ 50% = $122,400, which is $7,400 of new money.
The IPS numbers
Jordan has $115,000, adds $6,000 a year and wants $400,000 in 20 years (25 Oct 2026 to 25 Oct 2046). The RATE formula gives a required return of 3.52% a year. The stated loss limit is 25% in a 12-month period, which is $28,750 at today's value. With a yearly review, the next review date is 25 Oct 2027.
Common mistakes
- Targets that do not add up to 100%. The check cell turns red. Trades are wrong until it says OK.
- Counting one account only. Allocation is across every account in IPS 1.2. A bond-heavy 401(k) and a stock-only brokerage account can be balanced together.
- Mixing up percentage points and percent. A 5% band in points on a 30% target is 25%–35%. As a relative band it would be 28.5%–31.5%.
- Changing the allocation after a big market move. Investor.gov says the usual reason to change allocation is a change in time horizon, risk tolerance, finances or the goal itself. Market moves are what rebalancing is for.
- Ignoring tax and fees. A sale in a taxable account can create a capital gain. Write your rule in section 7 before you trade.
- Never reviewing it. Put the date from IPS 12.2 in your calendar, and review early after events listed in 12.3.
FAQ
What should be in an investment policy statement?
For an individual investor: who and which accounts it covers, goals, time horizon, return objective, risk tolerance, liquidity needs, tax considerations, constraints, permitted assets, a target allocation with allowable ranges, a rebalancing rule, a review schedule and signatures. These follow CFA Institute's 2010 paper on IPS elements for individual investors.
Do individual investors need an investment policy statement?
It is a personal tool, not a form you file anywhere. A written IPS gives you rules decided in advance, which CFA Institute describes as an objective course of action during market disruption. Even a short version with goals, allocation, bands and a review date covers the core.
How often should you review an investment policy statement?
Pick a schedule and write it in the IPS. CFA Institute's sample language reviews the IPS no less frequently than annually, and FINRA suggests considering rebalancing as part of an annual review. Review early after a change in time horizon, risk tolerance, finances or goals.
How do I know when to rebalance?
Investor.gov describes two triggers: a calendar interval, such as every six or twelve months, or when an asset class moves more than a percentage you set in advance. The template's Allocation tab flags any class outside its min/max band.
What is the difference between an IPS and a financial plan?
A financial plan covers your whole finances: budget, debt, insurance, retirement and estate. An IPS covers only the invested money and the rules for managing it. CFA Institute notes the investment strategy must be considered in the context of the overall financial plan.
Can I use this investment policy statement template in Google Sheets?
Yes. In Google Sheets choose File, Import, Upload and pick the .xlsx, or open it from Google Drive. The formulas use IF, SUM, COUNTIF, RATE and EDATE, which work in Sheets, Excel 2016+ and LibreOffice.
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Educational template only, not financial, tax or investment advice. It does not suggest an asset allocation. Example data is fictional: "Jordan Sample", the accounts, amounts, targets and bands are made up. Quotes from CFA Institute, Investor.gov and FINRA were retrieved on 25 October 2026.