How to recover the lost art of disciplined investing

Some of that discipline is already being provided through your employer if you have a 401(k) or 403(b) plan that auto-enrolls you in qualified investments. You merely have to take similar steps with the rest of your investments:

• Set your life on autopilot. Set up automatic contributions into your IRA and other vehicles. Once you set it, forget it.
• Sock away that raise. If you get a raise, consider increasing your automatic contributions. You got by the previous year without that money, so you may not miss it this year, but investing it will magnify your compounded returns.
• Get off the sidelines. Looking to invest a bonus or inheritance? Vanguard research shows that, in most cases, you would maximize your long-term profits if you invest in one lump sum rather than spreading it out over time. However, some investors are too risk-averse to invest a lump sum. Investing smaller fixed amounts at regular intervals, or dollar-cost averaging, does not guarantee investments will make a profit, nor does it protect against a market downturn; however, the practice reduces the risk of bad market timing and potential remorse.
• Have your fund rebalance for you. Rebalancing a portfolio is needed to maintain your desired risk level, but actively doing that periodically can be a chore. Further, it’s psychologically difficult to buy something that just went down in value. The solution? Consider a balanced fund that will automatically do the rebalancing for you.
• Consider advice. My self-reliant father was comfortable managing his own portfolio. But, for some people, seeking advice is very appropriate, especially if they don't have the time, willingness, or ability to manage investments on their own. If your financial situation is complex or you just need one-time guidance, consider consulting a financial advisor who can provide support and keep emotional impulses in check. Just be sure to find an advisor whose fee structure aligns with your interests.

Investing versus gambling

Besides the concrete steps outlined above, there are psychological barriers that need to be addressed. Many investors fall into two extremes when it comes to their mindset, either too aggressive or too timid. Both need to be reminded that investing and gambling are different.

In gambling, the odds are stacked against you over the long run. And some investment practices and products approach gambling. Day-trading to time short-term stock movements is notoriously difficult over the long run. And the more exotic investments and strategies such as levered and inverse exchange-traded funds are designed for short-term trading, not long-term investing.

With a traditional balanced portfolio, the odds are about even on any given day that its value will go up or down, but the odds are stacked in your favor over the long run, as investors have been historically “paid” for the risk of price fluctuations in stocks and bonds. ¹

Of course, all the appropriate caveats apply. There are absolutely no guarantees in investing. Markets will go through their normal up-and-down cycles and there will be times when your portfolio will decrease in value. That’s why it’s important to stick to your plan, remain disciplined and re-evaluate when your circumstances change.

My father passed away 20 years ago; however, his legacy lives on. His stocks helped with the down payment on my first home, and they are still providing dividends that help provide a comfortable retirement for my mother.

Discipline in investing has a lasting impact.

This commentary by James Martielli, head of Investment & Trading Services, originally appeared on Fortune.