Sticking To Your Investment Plan

Sticking to your investment plan can be tough. Sometimes it's a matter of blocking out the rumors, the fear mongering and the insistent chatter of people who want to convince you they've got the next great stock. More often, it's just a problem of fitting financial updates into your already busy life. Here are four tips for keeping yourself on track:

1. Automate, Automate, Automate

Just about any part of your investment strategy can be automated at this point. Obviously, you should start with auto deposits into your retirement plan contributions or investments, but also look at automating reinvestment of the dividends kicked off from your current stocks or funds. And whenever possible, automate the process of investing new contributions—the money you just put in your investment account won't actually do anything until you buy something with it.

2. Stop Fiddling

That's right. People who pay too much attention to their investments often do worse than those who just leave things well enough alone. Unless you plan on turning into a high-frequency trader, you only need to check on your investments occasionally. Make sure that your deposits and dividends are getting invested. If you are using asset allocation, make sure that gains and losses have not thrown your balance off too far. But otherwise be wary of the transaction fees, lost opportunities and short-term capital gains taxes that can come from fiddling too much with your investments.

3. Schedule Your Investment Review Around Another Event

Unfortunately, a patient, hands-off approach to your investments can lead to forgetting to look at you accounts entirely. To find the right balance between patient and fiddly, choose how often you will look in advance (for most people at least once a year but no more than monthly). Next schedule your reviews to coincide with something else in your household calendar—filing your tax returns, the end of school vacation weeks or when you pay your rent or mortgage, for instance.

4. Accept Setbacks

A good investment plan should stretch over years and usually, decades. And when we come up with a plan, we use our best guesses about the financial future. But life happens. Whether it's a windfall or an unexpected expense, you are almost guaranteed to have something unexpected come up that demands a change in your original plan. That's all part of the process.

If you find you have less money than you planned on, even if you have to take money out early, don't give up on your strategy. As soon as things have stabilized, dust yourself off, adjust the plan and start back in with the investing. We all love stories of people who never miss a monthly deposit, but you can build wealth just as successfully in the starts and stops that make up most of our lives.