Disciplined Investment

March 21, 2021

Disciplined investment means consistent investment. If you decide to invest every month, then you have to invest every month even in any market conditions. In Indian financial market, it has been observed that investors are investing without any defined objective. Unplanned or undisciplined investment ways always disturbs the financial health. The disciplined investment helps the investors to achieve their long term defined financial needs. Investors should follow the SMART goal approach in their investment. SMART goal means, it should be Specific, Measurable, Attainable, Realistic and Time bound. Without understanding the SMART goal approach, there is no productive result even from disciplined investment.

Specific means clearly define the end result and state exactly for which purpose you have planned the investment. Measurable determines the exact amount needed to reach this specific goal. In Attainable, one needs to create a step by step plan outlining exactly how this goal can be achieved. After that it is time to understand whether your goal is Realistic or not? In this process, examine the consequences of that goal and consider the trade-off and opportunity cost for the next best alternative that gives up as a result of the plan. And the last goal should be under Time bound, whether it is short-term goal or long-term goal.

As we have seen, the importance of SMART approach in disciplined or planned investment. But my personal observations in the investment market are, most of the Indian investors are doing unplanned and undisciplined investments which results unexpectedly. When investors start the investment and question is asked about defined financial goal for that investment, then are blindly give the answer that it for retirement or child education or child marriage etc. But hardly these predefined objectives are followed by them and discontinue the investment without understanding impact. If you have properly analyzed and evaluated your financial objectives and structured the strategy to reach these objectives, it is very important to exercise the disciplined investment strategy to your target. Disciplined investing can be challenging. Investment can be an emotional process, and the enticement to move away from your plan can be strong. Creating a strategy and selecting investments can be easy, but sticking to that strategy can be more difficult. There are various challenges during investment such as market conditions, financial stability, family needs, economic environment and many more for which you have to deal. And one of the greatest challenges in the investment market is managing your emotions when markets ups and down. Emotions can impact on your investment decisions.      

To sum up and bring your attention that you should be very conscious about investment habits and to control your emotions during investment decisions. You have to approach proper asset allocations and rebalancing strategies in your portfolio if needed. As a retail investor, you always remember that, do not need to do something every time with market volatility. How comfortable are you doing all these things on your own? If not, better to go with financial expert advice and enjoy your journey.

Author:
Dr. Himanshu Barot, Professor, Unitedworld School of Business (UWSB)

Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.