Lack Of Disciplined Investing Causes Most Losses

Lack of disciplined investment causes most investment losses. It’s that simple. If our investment program loses money over the 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. It’s one element only time won’t fix.

The mystery is why discipline and investment are mutually exclusive for so many people who have little difficulty being disciplined about other things. For example, it is not too difficult to be disciplined in the game. Breaking the rules is far less satisfying than playing the game the way it should be played.

So why do we have so many problems with disciplined investing? Why do we so often think that our way of working 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 bad, to be sure of one of two things: investing is a scam or a large number of people misunderstand. Why would that be, when the rules are pretty simple?

One of the problems with discipline is that no one else can tell us how to develop it. It’s something we have to do for ourselves. But maybe it only helps to know in advance that disciplined investing is so difficult for so many people. At least we can be ready for that lack of discipline that, looking back, we all recognize and regret.

There are only a few rules that are necessary for long-term investment success. One is proper diversification according to your age. The second is regular rebalancing, a simple method of taking some profit and reallocating capital to backlog investments (assuming you made reasonable choices 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. Self-confidence may sound ridiculous to a novice investor who understands little. Just take the time to learn about these simple rules and you will see the mathematical certainty behind some of the key ones. When you do this, you will gain all the confidence you need to get through the heavy patches that will inevitably come.

With confidence, you have everything you need. This will allow you to bring discipline, determination and patience with you.