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Investing Guide 2023: The Role of Discipline in Investing and Wealth Creation

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December 28th, 2022 08:48

Introduction

Everybody aspires to be wealthy. It is usually the primary motivation behind our work. However, wealth is a subjective concept. For someone, it might be within the confines of making ends meet. For others, wealth is enough to sustain the next generation as well. Whatever your definition of wealth, it is a given that you would want to create and increase your wealth. And when that is under consideration, we either look at our principal source of income, our 9-5 job, or we strive to increase our passive income stream. 

Now, whether you invest actively or passively, you are doing so to get profitable returns in the end. Most of the investment advice you might receive will end with - exercising your prudence- investment is subject to market risk. Therefore, study the market and make informed decisions. However, here is another word to the wise, you should follow discipline, patience and commitment. 

The role of discipline in wealth creation, specifically in investing, cannot be overstated. You may do your market analysis or lay down your financial planning. However, these are not one-time things. You shall be on your feet and consistently do what suits your financial objectives. The market keeps changing, life is uncertain, and therefore, your financial goals can also change with time, and discipline would help you absorb the market shocks and maintain your finances. 

Here are a few dos and don’ts of Investing to inculcate discipline:

Dos

Keep updated with contemporary developments! Keep an eye on the changes in the market even if you have invested in a long-term investment. Being aware of the market can prepare you for an upcoming blow. 

Do diversify your portfolio: If you keep a diversified portfolio, the risk gets absorbed better. And since you get dividends from more than one source, it usually generates a higher return. 

Do take the assistance of a broker, if need be: If you are a newcomer to investing or if your investment requires to be traded only with a licensed broker or simply if you think that hiring a broker would ease the process for you, then do the needed.

Don’ts

Don’t procrastinate: Your money will not increase. You have to pull out all the ends to channel it into better spheres. There is no better time than now because the market is fluctuating, and it will keep fluctuating. 

If you are waiting for it to remain stable, you might have to wait for an eternity. Of course, consider the market trend and do not simply jump on it. Also, do not also let procrastination be the reason behind your investment indiscipline. 

Don’t just be money-motivated: While it is clear that people invest to increase their wealth, being greedy could give contrary results. When you buy an investment, ask yourself if things go down, could you also absorb the stress and financial burden? If not, then you might want to tone it down a notch. 

Don’t take a back seat: Even if you are financing a long-term investment, don’t be MIA for the duration it is maturing. You don’t have to be on your feet but you also don’t have to take a backseat. Be regularly updated about your investments and how they are flaring out. 

“Successful investing professionals are disciplined and consistent and they think a great deal about what they do and how they do it.”

Ben Graham, the eminent American economist, emphasised the role of discipline in investment. Even a century before, it bore as much significance as it has today. Market trend changes and new investments enter into the scenario, but discipline is a factor that remains constant.

 Ben also added on by saying “the investor's chief problem and even his worst enemy is likely to be himself.” 

While factors affect your investment and the profitability of your returns, you are one of the primary factors. So, you can manage your investment that is in your hands. You can infuse discipline in approaching and managing your investments to way for you to achieve the ultimate objective of wealth creation!

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