Investor Discipline


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Part 10 of our Back to Basics Series

We all want to see our money grow. We all see what the long term growth of wealth looks like over many years and we envision seeing that same picture with our own wealth as it grows into a fortune.

Easier said than done. One of the biggest obstacles however is emotions and lack of discipline in the pursuit of that picture. When the market goes down, we lose focus on long term objectives and react, causing us to sell when prices are low. When the markets go up, we get caught in the euphoria and invest when prices are high. Our emotional spectrum races between worry and fear to excitement and greed. We continue this illogical behaviour regardless of the endless studies in behavioural finance that call out our bad behaviour.

Thoughts about our money and finances are very emotional in nature. Acting on emotion has the potential to destroy wealth. It is important to learn how to be disciplined as an investor. Warren Buffet is famously quoted saying “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”

The first step to building investor discipline is to understand how the markets work. We created a series in the past called “Rethink the way you invest.” Click here to access it.

It is important to build your investor discipline, especially as it supports your financial goals and future. Investor discipline is also important to weather the storms and volatility of the market, rather than reacting to it and the financial media. Regardless of your past investment actions, we hope that in understanding these truths of the market, you are able to pursue a better investment experience in pursuit of your dreams.