Investing without a plan is like sailing without a compass—you might catch some good winds, but you’re just as likely to drift aimlessly or capsize when storms hit. That’s why we firmly believe that every investor should create and follow a written investment policy statement (IPS). Yes, actually write it down—pen, paper, no excuses. This document will serve as your rational guide, keeping your emotions in check and ensuring you make decisions that align with your long-term financial goals (and no, “beating the S&P 500” is not a financial goal).
The Challenge of “Buy and Hold”
Buying and holding is easy when the market is soaring, but sticking to your investments during downturns is where the real test begins. Market corrections—10% declines—are normal and should never be a reason to panic. However, seeing red numbers in your portfolio can be unsettling. That’s why you must stick to the plan:
- Why Stick to the Plan? History shows that selling in a downturn often locks in losses and disrupts long-term growth. Staying invested ensures you’re positioned to benefit when the market rebounds.
- How to Stick to the Plan? When panic sets in, grab your written financial plan (you did write it down, right?), take a deep breath, sip your favorite beverage, and remind yourself why you invested in the first place.
Investing is a long game, and discipline is your greatest asset. So write your plan, trust your plan, and stick to it—even when the market tests your resolve.
