Lack of disciplined investment causes most investment losses. It’s so simple. If our investment program loses money over a period of years, we should probably blame ourselves, not the economy, bad luck, lack of knowledge or falling stock prices. Time solves these challenges.
The biggest single reason for investment losses: lack of disciplined investment. This is an element, only time will not work.
Why discipline and investment are mutually exclusive for so many people who have no difficulty being disciplined about other things is a puzzle. It’s not too hard to be disciplined about games, for example. Distorting the rules is much less satisfying than playing the game as it is supposed to be played.
So why do we have so many problems with disciplined investing? Why do we so often think that our way of doing things or our ideas should be better than the very simple rules that govern successful investment programs?
You just have to look at the number of people who lose or whose return is sad to be sure of one thing: investing is a scam or a large number of people go wrong. Why should this be the case when the rules are really quite simple?
One of the problems with discipline is that no one else can tell us how to develop it. This is something we need to do for ourselves. But it may be useful to know in advance that disciplined investing seems so difficult for so many people. At the very least, we can be prepared for this lack of discipline, which, when we look back, we all acknowledge and regret.
There are only a few rules that are essential for the long-term success of an investment. One is the right diversification according to your age. Another is regular rebalancing, a simple method of making some profits and reallocating capital to backlog investments (assuming you made a reasonable choice in the first place). There are a few others, of course, but they have less to do with choosing the right investment than you think.
Patience is an important attribute, as well as confidence in your decisions. Confidence may sound ridiculous to a novice investor who understands little. Just take the time to learn these simple rules and you will see the mathematical certainty behind some of the key ones. When you do, you will gain all the confidence you need to overcome the rough stains that will inevitably come.
With confidence you have everything you need. This will allow you to bring discipline, determination and patience to the table.