Markets had a strong start to the year, which was great news for investors’ portfolios. But more recently, we have seen greater uncertainty as markets pare back their expectations for interest-rate cuts this year. That’s why when it comes to investing – and probably most things in life – it is important to keep perspective and stay disciplined. 

Discipline is one of Vanguard’s four investing principles, and for good reason. Once you have defined your goals, chosen an appropriate asset allocation (a mix of shares and bonds1 that aligns with your attitude to risk) and minimised costs, being disciplined is what can get you closer to achieving investing success. 

So what is discipline and how can you practise it as an investor? In a nutshell, this is sticking to an investment plan and reevaluating it regularly to make sure it stays aligned to any change in your goals, situations or stage in life. Here are four things to remember that could help you to become a disciplined and successful investor.

Make regular contributions and increase them over time

You can power your portfolio by making regular contributions to your investment accounts and increasing those contributions over time, whether by investing part of a salary increase, bonus or any other income earned. 

The graph below shows how long it would take you to reach £500,000 under three different scenarios, each with an initial contribution of £10,000 and then annual contributions of £5,000. It shows how compound returns (where you earn a return on your return as well as on your initial investment) as well as increasing contributions can work together to achieve goals. In a scenario where annual investment returns are a hypothetical 4% and you increase your contributions by 5% a year, you will get to your goal quicker than if annual returns were 6% but you made no increase in your contributions.

Higher contributions, consistently maintained, can be a powerful factor in achieving objectives

The chart shows three different scenarios representing an investment portfolio and how long they would take to reach £500,000. Each scenario starts with an initial contribution of £10,000 made in year 1, with the first annual contribution of £5,000 made in year 2. Annual returns assumed are after inflation. In the first scenario (green line) the investor increases their contribution by 5% each year and receives a 4% annual return. In the second scenario (yellow line) the investor does not increase their contribution and receives a 6% annual return. In the third scenario (grey line) the investor does not increase their contribution and receives a 4% annual return. It takes 39, 45 and 69 years for these scenarios to reach £500,000 respectively.

Notes: Each scenario starts with an initial contribution of £10,000 made in year 1, with the first annual contribution of £5,000 made in year 2. Annual returns assumed are after inflation. The portfolio balances shown are hypothetical and do not reflect any particular investment. There is no guarantee that investors will be able to achieve similar rates of return. The final account balances do not reflect any taxes or penalties that might be due upon distribution. Any projections should be regarded as hypothetical in nature and do not reflect or guarantee future results.

Source: Vanguard

Stay invested through volatile times

Volatility (fluctuations in market prices) is a part of investing and outside an investor’s control. What you can control, however, is your reaction to it. It’s important to keep your emotions in check and stay focused on your goals.

The chart below illustrates how staying the course can increase your chances of investment success. It shows three examples of investor behaviour during the Covid-19 market downturn: staying invested throughout (grey line); going fully to cash in the week of 18 February 2020 and reinvesting in the week of 7 July 2020 (green line); and going fully to cash in the week of 20 March 2020 (market bottom) and reinvesting in the week of 7 July 2020 (orange line). The investors who fled the market locked in losses and ended up with much lower returns than the investor who remained invested throughout.

We know that markets fall (it is a certainty in investing) so it’s important to take a level of risk that you are comfortable with via an appropriate asset allocation and to stay invested.

The importance of maintaining discipline: Reacting to market volatility can jeopardise returns

Going to cash for just a few months can lead to underperformance

The line chart shows the importance of maintaining discipline during volatile market events, using the March 2020 market downturn as a case study. The vertical axis represents the portfolio return, running from -10% to 40%. The horizontal axis represents time, running from January 2018 to December 2023. Three lines are plotted. The grey line at the top of the chart represents a portfolio where the investor stays in the market after the March 2020 drop. The middle green line represents a portfolio where the investor goes to cash on 18 February 2020, and reinvests on 28 July 2020. The bottom orange line plots a portfolio where the investor moves to cash on 20 March 2020 (the market bottom), then reinvests into the market on 28 July 2020. In December 2023, the investor that remained in the market has made a 37% return. The investor that left the market for cash in February 2020 then reinvested in July 2020 has made a 29% return, while the investor that left the market for cash in March 2020 and reinvests in July 2020 has made a 15% return.

Past performance is not a reliable indicator of future results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Notes: The investment is in a portfolio made up of 60% shares and 40% bonds. Shares are represented by the FTSE Global All Cap Index. Bonds are represented by the Bloomberg Global Aggregate Bond Index (GBP Hedged). Currency hedging reduces the increase or decrease in the value of an investment due to changes in the exchange rate. It usually involves a separate transaction that is undertaken in the foreign exchange market before being converted into the investor's local currency. Cash is represented by the Sterling Overnight Index Average (SONIA) rate. Returns do not take into account inflation.

Sources: Vanguard calculations, using data from Morningstar, Inc. 1 January 2018 to 25 December 2023.

Rebalance to manage risks and maintain a suitable asset allocation

An appropriate asset allocation is also crucial for achieving your goals, but it’s only effective if it’s adhered to over time and through varying market conditions. If a portfolio isn’t rebalanced2 periodically to maintain your target asset allocation, you could increase the level of risk in your portfolio. For example, if shares perform well, you could end up with more shares than are appropriate for your attitude to risk.

How rebalancing works

How rebalancing works

Source: Vanguard

Follow a disciplined spending plan

When you start to draw money from your portfolio, for example in retirement, it’s important to set a spending strategy and stick to it. That doesn’t mean withdrawing the same amount each year but rather setting a ‘target’ amount that you would be comfortable having for your needs and then working around that. 

That means that when markets do well, you may be able to withdraw more than your target, but when markets do less well, you may have to be disciplined and take out less. The bottom line is not to spend more than you can afford.

It’s important to regularly monitor and review your investing goals to make sure they’re still relevant and realistic and that you’re on track to meet them.


Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.

2  Rebalancing is making sure the balance of shares and bonds in your portfolio is still in line with your goals and attitude to risk and making appropriate changes if necessary. See article

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