Investment Basics

The concept of discipline as part of a successful investment plan is an important one. While many people claim to be disciplined when they build their investment plan, when the tough times come they often bail on that established plan and opt, instead, to pursue other alternatives whether they are alternate asset classes, different contribution amounts, different securities or an entirely different plan altogether. However, as we will see here, discipline can have a tremendous impact on the long-term strength of your portfolio.

Here are three different ways that an investor needs to remain disciplined in their in their investment approach:

1) Stay Invested. With the recent volatility, much of which is owed to the abysmal 2008 year, staying invested has been a difficult thing to achieve. Many investors, at some of the worst times in 2008 and 2009, decided to "get out while they could." Headlines about the end of the world, lost retirements and evaporating wealth spooked a lot of investors to move from one asset class to another and stop contributing altogether. Since asset mix can account for more than 91% of a portfolio's returns, staying invested even when times are extremely tough is paramount. Warren Buffett did not stop investing, and neither should you.

2) Invest Methodically. Making your investment program a methodical one should help to achieve several things, least of which is a good adjustment to your cost base when things seem bad. By turning your investment process into an automatic behavior, you will also be better able to budget your cash flow. Since it is an automatic process, the method itself will help you to separate emotion from your investment portfolio.

3) Remain Objective. Easier said than done, making a point of staying objective helps to maintain the discipline needed to ensure your portfolio stays on track. Objectivity, although virtually impossible when you watch your personal savings and investments drop to historic lows, will help you to assess your situation logically rather than emotionally, which leads to making changes in the two disciplines above.

Remember, discipline is the foundation of building and sticking to an investment program. The discipline of billionaire investors has evidently helped them to achieve the success and wealth they currently enjoy. Although the circumstances might be a little unique, their behaviors and approach are not. In fact, they are replicable and as such, their disciplined approach to their investment portfolios should be replicated by the rest of us in our efforts to find success with our investments and wealth on our own unique terms.

Chris has more than 17 years of financial services experience. He currently manages a mattress website and has written about Kingsdown Mattresses. The website is QMattresses.com and it is about a lo more than just Kingsdown Mattresses. If you are interested in learning more about your sleep options, QMattresses.com is a source of great information.