Issue #24: How to Develop Patience in Investing
Learn how to build patience in investing with practical strategies backed by behavioral finance. Master discipline, avoid impulsive decisions, and let the market work in your favor.
Reading time: 5 minutes
Last week, I talked about how money flows from impatient to patient. But knowing that patience pays off is one thing; actually, practicing it is another.
So, how do you build patience in investing and avoid the traps that cause most people to underperform?
The challenge is that remaining patient is often psychologically difficult. Fortunately, behavioral finance not only diagnoses the problems – it also offers solutions.
Here are some actionable strategies, backed by research, to become a more patient (and successful) investor:
Increase Your Awareness of Biases
The first step is recognizing the behavioral biases that influence decisions. Human instincts can’t be eliminated, but understanding them will help you spot when emotions take over. Research shows that self-awareness allows investors to reduce the negative impact of biases on performance.
For example, when you know about loss aversion, you can catch yourself before panic-selling at the bottom.
When you understand herd mentality, you’re more likely to question whether a hot stock truly fits your plan.
Learning about behavioral finance sharpens your awareness of emotional impulses and strengthens your ability to stay committed to rational, long-term decisions.
Stick to a Long-Term Plan (Write It Down!)
Patience is easier when you have a clear plan to focus on.
Create a written Investment Policy Statement (IPS) that outlines your investment goals, time horizon, risk tolerance, and asset allocation. It’s your investing roadmap.
During volatile times, refer back to your plan rather than reacting to the market’s swings. Doing so will keep you aligned with your long-term objectives.
Importantly, you must set rules for periodic rebalancing (e.g., annually or when allocations stray by a certain amount) to systematically buy low and sell high.
Rebalancing adds a layer of discipline. It may feel hard to sell an asset that’s soaring or buy one that’s underperforming, but it implements the “buy low, sell high” logic without letting emotion take over.
Ignore Short-Term Noise
Today, we are bombarded by information.
But ask yourself: what changed?
Has your long-term thesis collapsed overnight, or are you just caught in the noise?
Why are you panicking?
There’s always something to worry about, but not everything deserves a reaction.
Behavioral experts suggest reviewing investments at fixed, infrequent intervals (monthly or even quarterly) rather than obsessing over daily moves. Checking too often makes every small dip feel like a crisis, which pushes us toward rash decisions.
Be selective about your information diet. Are you consuming valuable long-term analysis, or are you letting sensationalist media stir up anxiety? Much of financial news exists to provoke action rather than guide sound decision-making.
Control your exposure to “anxiety-inducing stimuli,” and you will create the mental space to stay disciplined. The market will always zigzag, but that’s not what matters. The goal is to stay on board for the long-term upward journey.
As the saying goes:
Don’t just do something, sit there.
The best move is often no move at all.
Use Rules or Automation to Counteract Emotion
Another strategy to cultivate patience is adopting a rules-based approach that removes day-to-day decision-making from the whims of emotion.
For example, you might set up automatic investments (such as contributing a fixed amount each month to your portfolio) so that you invest consistently regardless of market conditions.
You can also implement checklists or criteria for buying and selling decisions.
Determine in advance the fundamental conditions under which you would sell an investment (e.g., if its fundamentals deteriorate or it no longer meets your long-term criteria) so that you’re not selling just because of fear.
Similarly, have criteria for when to buy (valuation, quality, etc.) and stick to them. In practice, this is similar to following your IPS. You execute only based on pre-set rules rather than the feeling of the moment.
Just systemize your strategy, and you’re less likely to make impulsive moves. Even something as simple as a personal rule like “wait 48 hours before executing any non-routine trade” can help you avoid knee-jerk reactions.
Structure and automate your investing behavior as much as possible so patience becomes the default.
Example:
Only allocate a specific percentage of your overall portfolio to any single investment to avoid overexposure.
Seek a Second Opinion During Big Decisions
A financial advisor, a knowledgeable friend, a spouse, a parent, or a mentor who isn’t caught up in your fear or excitement can help you stay grounded. An independent voice offers a reality check and steers you back to your long-term plan when impulsive decisions tempt you.
Many advisors see their most valuable role as protecting clients from emotional mistakes. Simply talking through concerns with someone rationally slows down decision-making and adds perspective. One study found that working with an advisor helps investors stay on track, counteracting impulsive urges and reinforcing financial discipline.
For those without an advisor, a financially savvy friend or a spouse can serve the same purpose.
Another option is writing down your reasoning and “debating” yourself on paper. Or, even better, debating with AI.
The goal is to delay action and introduce a structured pause before making major changes. Often, this brief moment of reflection is enough to see that panic selling or chasing a trend works against your long-term goals.
Final Thoughts
Patience isn’t an innate trait; it’s a skill that can be built.
It’s the quiet force behind most investing success stories. It’s not as exciting as a hot stock tip or a clever market call, but it consistently proves its worth.
If you truly understand the behavioral biases that make patience so hard and implement strategies to counteract those biases, you can and will become more disciplined and successful.
The evidence is clear that the less you give in to impatience, the better your results: the market rewards those who wait.
Thank you so much for reading! See you next week.