Investment Policy Statement for John and Sarah

John and Sarah are a married couple in their mid-40s residing in a suburban area. They have a combined annual income of $180,000 and have two children aged 10 and 12. They currently have a mortgage of $250,000 on their home valued at $500,000. John and Sarah have expressed the desire to create a comfortable financial future for their children, particularly in funding their college education, while also planning for their retirement. They currently have $150,000 in liquid investments, primarily in a mix of equities and fixed income.

You have been tasked with creating an Investment Policy Statement (IPS) tailored to their financial situation. Discuss the key components of the IPS that you would recommend for John and Sarah, and explain how each component aligns with their financial goals and risk tolerance.