Started: Being Disciplined
Now that you've examined your risk tolerance,
time horizons, planned your budget and set your goals, what's next? Now comes
the toughest part of getting started on investing - being disciplined.
Those who are disciplined
Some of you might be saying, "That's easy,
I've been a disciplined person all my life. How tough can sticking to my investment
Picture this: Your kid is all grown up and will
be going to university in a year's time. You foresee a large amount of money
being needed for tuition, books, living expenses and so on. You think you have
everything covered, then suddenly, your father falls ill and requires money
for a triple heart bypass operation. The only way you can afford to finance
both would be to cash in the investments meant for your retirement. So what
should you do?
Ok, perhaps this example is a little drastic,
but you get the idea of the kind of goal conflicts that can arise. Unexpected
things can happen to throw you off-course. To ensure that you can still stick
to your initial goals, you should try to get round the obstacles, rather than
allow the obstacles to change your pre-planned course. In the above example,
perhaps you can take out a tuition loan for your kid to help offset the full
cost of his education. It needn't necessarily mean a dip into your retirement
Those who are not
For those of you for whom discipline is a problem
(you feel you 'must have' that Chanel bag you've just seen), this point becomes
even more important. If you constantly compromise your long term plans for short
term gratification, you may never achieve your goals.
Being disciplined does not mean being rigid and
sticking stubbornly to your goals; rather, it is keeping your goals in mind when
you are making your decisions.
There will be times when you feel you have to
change your plans. This is alright. As long as you put a new plan in place and
you have new goals to reach out for. In any event, your needs change over time
so you should look at your priorities every five years or so, to be sure that
they're still what you want.
2 - Basics of Investing