Unit 4 · Level 4 · Staying the course
Write the rules before the storm
Pilots don't improvise emergencies; they open a checklist written on a calm day. An Investment Policy Statement (IPS) is yours: one page stating your goal, your allocation, your monthly contribution, your rebalancing rule, and exactly what you'll do when markets fall 30%. Traders keep a trading plan; investors keep an IPS. Same principle, longer weather.
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What you get asked
Build your IPS: put the steps in order
Goal first, allocation second: risk is chosen to fit the mission, never to fit the mood. The crash clause goes last but gets used the hardest.
What is the real point of writing an IPS?
The IPS can't move markets, but it moves YOU. In a crash you don't debate with your fear; you outvote it with a letter from your smarter, calmer self.
The golden rule of investment policy: write the rules ___ the storm.
During the storm your brain is flooded with fear, and Unit 1 showed what that costs. Calm-day rules are the only ones worth following on a bad day.
Which is the best-written crash clause for an IPS?
A good clause removes decisions instead of creating them. 'Decide later based on news' is not a rule; it's a trapdoor back into the behavior gap.
How long should a first IPS actually be?
If you can't reread it with your heart pounding, it's too long. One page, five rules, taped where future-you will look. 🐜
The rest of this unit
Rules for storms, rituals for calm: how graduates behave for decades.