IPS (Investor Policy Statement)

These days, I’m setting some time aside to write my Investor Policy Statement (IPS), inspired by Mr.RIP, an Italian blogger and content creator, and his recent update about his old IPS, which you can find here.

The aim of an IPS, as I intend it throughout this post, should be to plan your investments years ahead, starting from some objectives, then defining strategies, and, in the end, an asset allocation.

For instance:

  • My objective is to reach retirement age around 65 years old with a decent safety nest of securities
  • My strategy is putting aside 15% of my income and investing it in both index funds (or ETFs) and hand-picked stocks/bonds
  • My asset allocation is 40% stock ETFs, 20% single stocks, 40% single bonds

Mr. RIP also has a section about his philosophy of investments and investment details, but for simplicity I merged them into the strategy section.


There’s only one caveat to this whole architecture: the act of starting from objectives is, to say the least, weak. I believe objectives are not an endurable asset throughout your life. Objectives mutate each year. I think Mr. RIP noticed this, since in his update to the IPS, his new objectives are a lot broader and more generic than the original IPS.

What I’m coming to realize is this: planning and having specific objectives is not worth it. Unless we’re talking about something coming up in the next year or so, thinking you can really pursue a very narrow objective for 10 or more years without rethinking it, is usually wishful thinking.

At this point, the counterargument I usually hear is Having an objective, and acting accordingly, is better than having none and just living day-by-day. At a first reading it seems correct. A purpose gives you strength: if that purpose changes through the way, you may still have accumulated some resources (money usually) to invest it elsewhere and follow another purpose. I kind of agree about having this flexibility. But I can’t help but think that maybe, what you should have followed instead, is having that flexibility. Instead of giving yourself the illusion of an objective (“In 10 years time, I want to become financially independent!”), you could have planned something less specific, and reasonable (“In 10 years time, I want to have a good saving nest for whatever purpose I’ll find to spend part of it”).

But I understand, at this point, life would probably be emptier. As humans, we usually need a more powerful substance to fuel our life. Chasing the dream of opening that toys store where kids will come and cheer, instead of having the generic objective of being financially safe and flexible, sounds a lot better to our ears. And yet, I think for most of us, dreams and aspirations change each year. They rarely stick in a person’s life.


Thinking in broader terms, if your purpose is being happy, that resolves to two aspects, in the end:

  • Pursuing what makes us happy
  • Avoiding what makes us unhappy

And while having a very specific objective certainly fullfills number 1 greatly, it fails spectacularly at number 2. Chasing a dream is a road paved with difficulties and hardships. Doesn’t it make more sense to give up chasing a dream, and instead, just have some generic guidelines throughout your life? That way, you can still pursue happiness, while avoiding more moments of unhappiness along the way.

… or pain?

Yes. But…

Are we really wired that way?

This is a fundamental question. If, as human beings, we’re just built to pursue very specific dreams and fullfillment, does it even make sense to try avoiding having those dreams?

Siddhartha Gautama, better known as the Buddha, would probably say yes. All the original buddhist philosophy (as far as I understand it) revolves around escaping Dharma, the perpetual rotating engine of desire, fullfillment and the pain it brings (and of reincarnation in a more religious sense). Escaping desire surely seems like what we’re trying to achieve here. No dreams, just guidelines.

And yet, does it make sense? Isn’t the avoidance of pain, after all, pain? Escaping Dharma is a struggle which could be eternal. How can I escape my own very instinctual nature, without a fight so intense it will probably bleed me out of all energies?

In the end, accepting myself and my own nature seems more reasonable. Life is struggle, life is pain. And the caveat here is, whenever I’m not struggling, my own self will suffer anyway: after a brief moment of joy, hedonism adaptation will kick in, and life will become boring in my eyes. And I shall move on again, back to another struggle. “He who hesitates is lost”, they say, and for good reasons. Stasis kills the self.

Wrapping up

I may have derailed a bit here. I think, in the end, we can extract two key takeaways:

  • Do have objectives, because that’s what your brain is wired to do, and that’s what’s going to bring you joy in the short term; but beware of the fact that those objectives will surely change, sooner rather than later;
  • Save up resources for your objectives, current or future ones: having that flexibility will help in any case.

Until next time!