How a simple, repetitive investing process can help you build wealth

Contrary to depictions of investing as a high-stakes gamble, successful investing is often quite mundane. It involves consistent, repetitive actions, avoiding the allure of market noise and sticking to a well-thought-out plan. Investors who manage to follow a disciplined approach typically fare better in the long run. Working with a professional can help take the guesswork out of investing, setting you on a path tailored to your needs.

The volume of investing choices and barrage of minute-by-minute market updates can be overwhelming. To navigate this landscape, the first step is to work with an advisor. They can help you map out your current financial situation, goals, and risk tolerance. Knowing where you are, where you want to be and how to get there is essential to becoming a disciplined investor.

Next, it’s important to stay focused on the journey and not get distracted by occasional market turbulence. Creating a simple, repetitive process for investing removes emotions and guesswork from the equation.

You’ve probably heard that over the long run, the market has tended to rise. However, many investors imagine this growth as a smooth, predictable path, which is far from reality.

In truth, portfolio growth is much more volatile. Despite the bumps along the road, disciplined investors who stick to their plan ultimately see significant growth in their investments.

Emotional reactions to market movements can be detrimental to portfolio health. Investors who panic during downturns and sell assets only to re-enter the market after it recovers miss out on significant gains.

For example, let’s say that 30 years ago you had an initial investment of $100,000 in your portfolio. If over the next three decades you consistently sold at the bottom of market drops and re-purchased investments once it recovered, your portfolio would have remained close to its initial $100,000 value with no growth. By contrast, a disciplined, buy-and-hold strategy could have grown the value of your portfolio to more than $1 million.¹ This stark difference illustrates the importance of removing emotions from investing decisions.

One effective way to reduce stress and maintain discipline is through automated investing. Regular monthly or bi-weekly contributions to an investment account can simplify the process and remove the need for constant decision-making. This "set it and forget it" approach ensures that investing happens automatically, minimizing emotional decisions and allowing you to focus on other aspects of life.

For instance, monthly RRSP contributions over 30 years can generate a portfolio value that greatly exceeds your contributions, despite market turbulence along the journey. Starting with a lump sum followed by regular contributions can produce even better results, thanks to the power of compounded returns.

A simple, repetitive process can help investors capture long-term market returns and make disciplined choices during occasional market cycles and volatility. An advisor can help create a plan tailored to your unique needs, setting you on a path to building wealth with confidence and peace of mind.