What is the most important part of investing? Discipline!
Today, I met with a guy to get a quote on refinishing the hardwood floors in our old office building. He asked about our business. When I told him that we are a financial advisory firm, he started telling me about his investment history.
I wasn’t sure where the story was going. He said 30 years ago, he was doing some floor work for an “old broker” in town. At the time, he was 25 years old and he told him that he didn’t have the $1,000 needed to make the initial investment in a mutual fund. The “old broker” told him to set up a savings account and start putting $25 per week in the account. He told him to invest the money at the end of the year, when he had $1,200 saved. He said to pick a solid mutual fund and continue to invest $100 per month into the fund.
He took this advice and stuck to it. He left money alone, even when it was tempting to use it at times. It is now worth $122,000. His total investment was $36,000. These 30 years took him through several strong bull market periods and several big recessions and market downturns. But he stuck to it.
So, what is the major factor here? Discipline! He did not waver even when it was tempting to do so. This is a lesson that we can all learn, or at least be a great reminder of a sound principle of investing.
Discipline is one of the most important parts of investing, if not the most important part!