Why being a disciplined investor can be advantageous

By this, we mean investing in a globally diversified portfolio of assets and holding onto them for the long term, without trying to time the market or make frequent changes. It is tempting to be swayed by the media.. Here are five reasons why being disciplined can be advantageous:

Lower Costs: Asset Class or “index” investing involves investing in funds that aim to replicate the performance of a specific market index. Such strategies typically have low costs. They require less research and decision-making. This involves lower management fees and expenses. Over time, lower costs can significantly impact your overall returns.

Consistency and Simplicity: Evidence based investing follows a straightforward approach of buying and holding a diversified set of assets. This simplicity makes it easier to stick to your investment strategy long term, as you’re not constantly making complex decisions under time pressure about which stocks or assets to buy or sell.

Reduced Emotional Bias: Active investing or stock picking often involves making decisions based on short-term market fluctuations, news, and emotional reactions. Passive investors  avoid these emotional biases by focusing on the long-term performance of the overall market. This rational decision-making, prevents impulsive actions driven by fear.

Time Efficiency: A long term, research based approach to investing requires less costly trading whilst freeing up time for other aspects of life.  This reduces the stress associated with constant decision-making.

Historical Performance: Being focused and disciplined, drowning out the media noise , allows you to capture the overall market’s returns, which, historically, have shown consistent growth over extended periods.

There is no crystal ball to determine how markets will perform, but it makes sense to be globally diversified with a long term approach. Chopping and changing out of investments can be costly and stressful. Each individual’s financial goals, risk tolerance, and investment horizon should be considered when deciding on an investment strategy – and this is where a financial adviser can add value.

For a second opinion, or a fresh look at your finances, give Holland Hahn & Wills a call. An initial chat is free, with no obligation and could save you a lot of worry.

020 8943 9229 | enquiry@hhw-uk.com | hhw-uk.com

This article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products. Investing involves risk – the value of investments and income from them may fall as well as rise and is not guaranteed.