temperament
Write Your Policy In Calm Times
The rule
Write your long-term plan while you are calm. Then the page can overrule the panicked or greedy version of you later.
Where it flips
A written plan can turn into a stubborn cage if you refuse to update it even as your job, family or goals truly change. The fix is to revisit it on a fixed date, say once a year, and change it for real reasons - never in the heat of a market swing.
The hardest moments in investing are a crashing market and a booming one. Both tempt you to throw away your plan. The defence is to write down, in a calm moment, exactly how you will invest. Your stock-safe split, how much you add each month, and what you will and will not do when prices swing. This written plan is a promise from your clear-headed self to your frightened future self. When the market halves or triples, you follow the page, not the feeling.
A worked example
Before the next fall, Aayra writes one page: 60% stock index, 40% debt, ₹20,000 SIP monthly, rebalance once a year, never sell in a crash. When the market drops 30%, she rereads it and keeps buying instead of stopping. [illustrative]
How to spot it
- ·no written rules, only 'I'll decide when it happens'
- ·the plan changes every time the market moves
- ·the plan never reviewed on a set date
Charles D. Ellis · Winning the Loser's Game