Retirement Planning: Why You Should Have an Investment Policy Statement

(The Street) Do you go into a panic mode every time the stock market falls?

If you have a plan - an investment policy statement -- there's no need to panic when the market declines in value. But if you don't have a plan there's no need to panic either. Instead, your best bet is to make a plan - to draft an investment policy statement or IPS.

An IPS is a document that details how what percent of your portfolio you'll invest in stocks, bonds and cash. The IPS also specifies your time horizon, investment objective, and risk tolerance. But most importantly, the IPS establishes when you will sell and when you buy. And it's based on rules not on emotion. In essence, you'll never worry about market declines - no matter how steep or frequent -- again.

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