Volatility is a fact of the market linked investments. Just that when it decides to play a little harder, there are investors who run like plucked chicken. I mean the unprepared ones. They are making frantic calls, reading anything and everything to know what should be the next action? Well, is that how your investment plan works?
I ask a stupid question!
On questions, here’s an exchange I had with a learned person.
What makes an investor successful?
Making money work with a plan.
What makes a good plan?
A set of rules including a rule on when not to follow a rule.
What makes a money rule successful?
When it can help control your unruly instincts and prevent you from making the the most stupid mistakes with your money.
Who defines the rules?
or, You with a trusted ally, an advisor.
Nothing of this may sound new to you. In fact it can come across to you as boring bookish basic gyan.
But you know no investor worth his while became successful any other way. They follow their rules, keep activity to the minimum and they don’t cave in to things they can’t control.
They constantly revisit the basics and rely only on the plan. And in times like these, should you be acting any different? You too need to follow your plan, your rules. You need to check if you are the one in control.
No plan, no control
The sad truth is every ones wants to invest but no one wants to plan.
Because the expectations with a plan are not set correct.
A plan is not your ticket to the millionaire club.
A plan helps you control your behaviour by putting your money into context of its use, the risk that you need or can digest and choosing your investments based on rationale.
There is no instant magic; these are not 2 minute noodles.
The investing journey is a long one and a plan helps you build and tap into your patience, perseverance & discipline.
A plan (in consultation with the right advisor) prevents you from making stupid mistakes that can burn down your hard earned money.
An individual investment can go wrong but a good plan provides for these events. It provides for what can go wrong!
It keeps you firm on the compounding journey which is much further away. In fact, you spend the first few years finding find your feet. The running or the compounding magic is still further away.
I bet you rarely think like this. The fact is you need to remind this to yourself everyday.
This is a first in the upcoming series of short posts on making a financial plan work for you.
Between you and me: Do you plan? Has it helped so far? Have you given in too soon? Share your thoughts in the comments.