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Patience And Discipline: The Key Ingredients For Long Term Investing Success

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long term investing

Are you looking for a way to grow wealth and secure your financial future? If so, you might be tempted to chase quick gains or react to market fluctuations. However, these short-term strategies can be risky and costly in the long run. Instead, you should consider long term investing, which involves buying and holding stocks or other investments for an extended period, typically ten years or more.

Long term investing can provide higher returns, lower costs, and less stress than short-term trading. But it also requires patience and discipline, which many investors lack or struggle to develop.

Patience is the ability to wait for the right opportunity and resist the temptation to chase quick gains or react to market fluctuations. Discipline is the ability to stick to a plan and follow rules that guide your investing decisions. Together, these traits can help you avoid common investing mistakes such as market timing, overtrading, and herd mentality.

This article will explain why patience and discipline are essential for long term investing success and how to cultivate them.

Defining Long term Investing

Long term investing is the process of sowing quality seeds today that will bear fruit tomorrow. It is a strategy that prioritises quality over quantity, patience over greed, and vision over fear. Long term investing is about staying in the market rather than timing it. It is about believing in the process rather than the outcome.

Long term investing is the best way to build wealth and achieve financial objectives. In the context of stock markets, long term investing, when simply put, is buying and holding equity or equity funds for more than one year. The intent is to safely cruise through the choppy market while protecting your capital from market volatility.

Importance of Patience in Long term Investing

If you are looking for get-rich-quick recipes, long term investing is not for you. Building value takes time and discipline, and it never produces instant gratification. Patience is the key to unlocking the power of compounding and reaping the rewards of long term investing. So instead of chasing a quick buck, you should aim for long-term sustainable returns.

Understand Your Risk Tolerance:

Let’s accept that risk is an inescapable part of investing. Numerous factors influence your investments, such as the occurrence/reoccurrence of an epidemic such as Covid-19, any unprecedented economic crisis, recession, and many more that put your patience to the test. As a result, before embarking on any investment plans, you must first assess your risk tolerance.

Unlock the Power of Dollar-Cost Averaging (DCA)

Dollar-cost Averaging (DCA) is an investment strategy of investing a fixed amount of money at regular intervals, regardless of the market price. This way, you buy more shares when the price is low and fewer when the price is high. This long term investing strategy reduces the average cost per share and smooths out the effects of market volatility.

Let me give you a realistic example to help you relate better. Suppose you want to invest Rs. 100 every month starting from January in a mutual fund whose NAV (Net Asset Value) or the current fund price is Rs. 10/-.

MonthNAV (in Rs.)Shares Bought

By the end of April, you have invested Rs. 400 and bought 47.9 shares. Your average cost per share is  Rs. 8.35 ( Rs. 400 / 47.9), lower than the average market price of  Rs. 8.5 (Rs.10 + Rs 8 + Rs. 9 + Rs. 7 / 4). If you had invested all your money in January, you would have bought only 40 shares at Rs. 10 each.

Avoid Trying To Time the Market

 Timing the market is the attempt to predict the future direction of stock prices and buy or sell accordingly, which is unpredictable. If you try to time the market and take investment rides guided by the market cycles, daily price movements, trends, news and indicators, you expose yourself to unnecessary risk and stress.

So, stop trying to time the market by chasing the unpredictable, rather like a wise investor, save your time, tax, and peace by focusing on the growth potential of long term investing.

Importance of Discipline in Long term Investing

By being disciplined, you can benefit from the power of compounding, which is the process of earning interest on your interest. Compounding can significantly increase your returns over time if you reinvest your earnings and let them grow.

Rebalance As Needed

Rebalancing is adjusting your portfolio to match your desired asset allocation and risk level to optimise returns. Rebalancing can be done in different ways- like using a calendar, a constant mix or a portfolio-insurance strategy after carefully weighing the pros and cons. Rebalancing is a discipline that is important for long term investing and keeps you on track and aligned with your intent.

Remember Your Goals

Investing is not a game or a hobby but a means to achieve your financial objectives. If you keep your destination in mind, you will stay focused and motivated to overcome obstacles and enjoy the long term investing journey. Remember the financial goals you want to achieve, such as retiring comfortably, buying a house, or funding your child’s education and stick to them to achieve your desired goals.

Avoid Emotionally Driven Decisions

Now that you have chosen your investments, allocated your assets, and diversified your portfolio. Of course, you will face some market fluctuations, economic downturns, and emotional biases along the way. You may be tempted to sell your investments, chase the latest fads, or panic and withdraw your money. But if you remember your goal, you will stick to your plan and avoid making costly mistakes.

Key Takeaways

By being patient and disciplined, you can reduce your costs and risks. For example, frequent trading can incur higher fees and taxes that can affect your profits. It can also expose you to more volatility and uncertainty, eroding your confidence and peace of mind. On the other hand, holding your investments in long term investing can lower your expenses and allow you to ride out market fluctuations.

To develop patience and discipline in investing, you must have a clear goal, realistic expectations, and a diversified portfolio. You must also do your homework and research the companies you invest in. Additionally, you need to monitor your performance and review your strategy periodically. Finally, you must control your emotions and avoid letting fear or greed influence your decisions.


How can I develop patience and discipline in long term investing if I lack these characteristics?

You can develop patience and discipline over time by following these steps:

1. Define your objectives for long term investing.
2. Choose investment vehicles that are appropriate for your risk profile.
3. Select only fundamentally strong companies when investing in the stock market.
3. It is just as important to start investing early as it is to invest regularly.
4. Ignore any short-term changes along the way.
5. Review your portfolio regularly but not too frequently to stay emotionally balanced and avoid whims,
Enjoy your investing journey while keeping your sights set on your objectives.

Are there any downsides to patience and discipline in long term investing?

Yes, every reward comes with challenges, and so do the virtues of patience and discipline.
1. You may miss out on some money-making opportunities that may arise from market timing or speculation.
2. Facing criticism or disapproval from your friends who follow different investment styles or opinions.
3. Retaining your emotional balance during the market peaks and troughs.
You can easily overcome these challenges when you are focused on achieving your financial goals.

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