What is Investment Policy?

Many governments operate with de facto policies whereby a public official conducts investment operations in a vacuum while everybody else assumes that he or she will act responsibly. Only when something goes awry do elected officials and the press begin to question the investment policy or absence thereof.

The investment process is hardly immune from the delusion that legislation can remedy all problems, but the process is improved when elected officials act responsibly to identify objectives, assign responsibility, and address the problems of risk inherent in the investment of public funds. Conscious collective action is better than no action at all. Formal policies can result in superior performance and improved communication.

A formalized investment policy, adopted by the city council, can provide the necessary guidance to the clerk‐treasurer, to ensure their investment decisions are consistent with the council’s wishes. The council, through its investment policy can assign responsibility, emphasize safety first, the preservation and protection of capital, and clearly state that speculation is inappropriate in all circumstances.

Sample investment policies can be obtained from the Government Finance Officers’ Association, internet searches, and other Montana local governments.

Montana Municipal Officials Handbooks 3rd Edition, Section 5.104