There are people who are disciplined and
there are who are not. What is the difference between these two sets of people?
The first set of people lead an orderly, healthy and peaceful life, prepared
for the ups and downs, not upset with the lows, and make others feel
comfortable in their company. The second set of people are those who keep
moving from one crisis to the other driven more by circumstances and
responding to them wholly unprepared taking a toll on their health, peace of
mind and relationship with others.
Why
Discipline is Necessary?
Life is a journey. Whenever we think of
going on a vacation do we go it just like that?. For such vacation, there has
to be lots of planning and preparation to meet certain uncertain eventualities.
Same is the situation for life. A planned journey makes it orderly, happy and
peaceful. So is for life and so is for investment.
Discipline
is a Key factor to be a Successful Long Term Investor:
Why do we need to invest at all? The
answer is to meet our short term, medium term and long term financial goals. Our
idea of investing is not getting returns from one single transaction, but to
invest and generate returns in multiple transactions over period of time. So
that, we can meet all our financial goals and be a successful long-tem
investor. To be a successful long term investor, you need to be a disciplined
investor. You need to follow some strategies consistently. You need to review
your portfolio regularly.
Creating
a Disciplined Investment Plan:
The Discipline of writing something down
is the first step toward making it happen. We are living today much longer and
we are going to live much longer tomorrow. Most people are not in a position to
earn by working once they are above 75 years of age. If they have to live
another 15 years or so they would need money and with inflation, they would
need more money than today, to lead the present lifestyle.
Hence a disciplined investment approach
will help them to achieve their long term financial needs and will not be
required to depend on others. For this, one has to invest in equity more, when
one is young, and after doing it for 25 to 30 years may start moving towards
more to debt. You need to invest in such way that your investment are beating
inflation at least during the accumulation phase i.e. pre-retirement phase.
A long term plan of investing in Mutual
Fund SIP (Systematic Investment Plan), in mutual fund schemes with a good track
record, will give you fabulous returns in an investment horizon of 25 to 30
years. The last 40 years in Indian economic scenario we have seen several ups
and downs and we are going to see similar volatility in the next 40 years. The human
spirit creates the volatility and also helps overcome them and move towards a
more comfortable life style.
Why
Discipline in Investment is Needed?
There is no magic wand that can resolve
our problems. The solution rests with our work and discipline.
A journey of investment over 30 years is
like going for the Mt. Kailash Manas Sarovar Yatra of olden days (not that of
today where you go by air to Kathmandu, then take a beautiful SUV to China
border and from there a still more beautiful bus to Mt. Kailash Manas Sarovar)
where meticulous planning is required with regular monitoring when faced with
uncertain weather and other challenges during the Yatra. A highly disciplined
person would have been able to complete the Yatra and return to family and
friends in those days.
Same is the case for a 30 years period
yatra of investments, where you have vehicles like , Blue chip Company stocks,
good Mutual Fund Schemes, Gold ETFs and Fixed deposits with banks and
will help you to build a financial castle which will take care of all the
earthquakes, cyclones, and droughts of life beyond 75 years of Life. Get
prepared in a Disciplined Way!!!
Some Disciplines to
Ponder Over:
· Create a customised
financial plan, implement the financial plan and stick to the financial plan
regardless of the market conditions.
· Create an asset
allocation ratio based on your risk taking appetite and required rate of
return; Rebalance periodically and maintain the same asset allocation.
· Continue your Mutual
Fund SIP till you meet your financial goals. Don’t stop in-between.
· Review your financial
plan and investment plan regularly.
The
author is Ramalingam
K, CFP CM is the Chief Financial Planner at holisticinvestment.in,
a leading Financial
Planning and Wealth Management company.
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