How do I become a disciplined investor?

Published: January 11, 2022 at 7:00 am

Apurva asks, “You often talk about the importance of discipline in investing. How do I become more disciplined?”

Hard work and discipline are often not recognised as talents anyone can develop (at least in principle). Here are two steps to becoming more disciplined in everything that we do.

  1. Organisation
  2. Routine

1. Organisation: Now that we are starting a new year, buy a monthly planner. You can get one under Rs. 100. I have been using this type for years (residents of Mylapore, Chennai would know where this is available!)

Monthly Planner Front Cover
Monthly Planner Front Cover
Monthly Planner a look inside
Monthly planner a look inside

Enter all the things you need to do over the year: insurance premiums, advance tax deadline, society payments, school fees etc.

Open it the first thing in the morning and plan your day. I prefer making a weekly list of things to do in addition and relish striking down actions taken.


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2. Routine: Stick to a routine. Compartmentalise your day. Allocate time for chores, exercise, leisure, kids, sleep and meals (at night and if you are lucky enough in the afternoon!). Following this routine every day builds discipline.

Investment discipline requires one additional step. I would recommend completing the above two steps first.

3. Planning:  We need to know why we invest and when we need the money. We need to know how much to invest per month (or quarter or year) and how to allocate this in different asset classes. The full list of steps can be found here: Basics of portfolio construction: A guide for beginners.

Once our goal-based planning is done, we go to our monthly planner and mark “Invest!” as an action each month or quarter (for those with uncertain income streams).

We then stick to the investment plan come what may. This simple strategy that I have been following for more than ten years has given me financial independence and beyond. See Portfolio Audit 2021: How my goal-based investments fared this year.

Putting this plan in place is one thing and quite another to execute it. This is where we rely on emotions! Yes, the very thing that can disrupt the plan, but with a key difference – we become emotional about why we are investing and what it means to us. We do not waste our emotions on daily market movements and expert opinions. See: Worried about the market crash? Use emotions to understand the cost of pulling out.

The time now to act. Take small steps without expectations, but take them every day. After a while, you will be surprised by how far you have progressed. Prudence is the planning and discipline is the journey and walking the talk is always tougher, but do try.

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About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.
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