The Investing Plan Almost No One Has, But Everyone Needs
How to Stop Investing Like Alice in Wonderland
If you don’t know where you’re going, any road will get you there.
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to.”
“I don't much care where.”
“Then it doesn't much matter which way you go.”
“...So long as I get somewhere.”
“Oh, you're sure to do that, if only you walk long enough.”
- Alice in Wonderland, Lewis Carroll
Most people invest like Alice.
They say they want to “make as much money as possible” while also “taking as little risk as possible.”
That’s not a strategy. That’s a wish.
If you don’t have a plan, the market will make one for you. And you might not like it.
The problem: most people invest emotionally
When things go up, we feel smart.
When things go down, we feel scared.
Without a clear plan, emotions drive the bus.
That’s why even disciplined investors buy high, sell low, and then swear off the market until they regret it later.
A written Investment Policy Statement (IPS) is your antidote to that chaos.
What an IPS actually does
An Investment Policy Statement is your personal financial roadmap. It’s the set of rules that keeps you rational when everyone else is panicking.
It’s a document that spells out:
🎯 Your goals: what you’re actually investing for
🕒 Your time horizon: when you’ll need the money
💧 Your liquidity needs: how accessible your funds must be
⚖️ Your risk tolerance: how much volatility you can stomach
📊 Your target allocation: how much to put in stocks, bonds, cash, etc.
🔁 Your rebalancing rules: how often you’ll adjust to stay on track
When you have all of that written down, market dips don’t rattle you. You can feel confident knowing your next move is already decided.
Why it matters
Markets are unpredictable.
Your reaction doesn’t have to be.
An IPS gives you clarity when the headlines are screaming. It’s not about predicting the future; it’s about pre-committing to how you’ll behave when the future gets messy.
In other words, it keeps you from being your own worst enemy.
How the professionals do it
Professional investors always start with these questions.
They don’t pick stocks based on headlines, hot tips, or what their friends are buying. They level-set with a client’s goals, timeline, and risk tolerance first.
That’s why every credible advisor will ask about your purpose, liquidity needs, and comfort with volatility before giving a single recommendation.
If someone offers investing advice without first understanding your answers to these questions, take it with a grain of salt. You’re not just risking money, you’re risking strategy. Your IPS puts you in the driver’s seat, the way the pros do it.
How to create one
Ask yourself a few grounding questions:
What’s the purpose of this money? (Retirement? House down payment? Generational wealth?)
How long until I’ll need to access it?
How much could I lose (temporarily) and still sleep at night?
What’s my income situation and safety net?
How will I rebalance or course-correct when the market moves?
Once you’ve answered those, write them down.
That’s your first draft of an IPS.
It doesn’t need to be fancy. It just needs to exist.
The bottom line
A solid Investment Policy Statement turns investing from guessing into guiding.
When the market swings (and it will), you won’t panic. You’ll act based on your plan, not your feelings.
Because failing to plan isn’t neutral.
It’s just planning to fail.