As I write this article the world stock markets are making the headlines again with most of the developed markets experiencing substantial falls since the end of February.

Volatility is not just a recent phenomenon. We have been through a period of low market volatility and relatively good stock market returns in recent years. This has in fact been out of the ordinary, but it is easy to become accustomed to these market conditions and increase your holdings considering them to be the new ‘normal’.

This normal behaviour can have a damaging effect on wealth creation if not understood and addressed appropriately.

Source: Carl Richards (Behaviour Gap, 2018)

Investment decisions based on emotional reactions and recent performance don’t generally end well. By the time you've jumped on (or off) an investment bandwagon, chances are you've already missed out on whatever advantage you might have gained. Instead of trying to time the market, look at the big picture, stick to the strategy and think long term.

One safe prediction about the financial markets is that they're completely unpredictable. That's why market-timing and performance-chasing seldom work.

Granted, it's hard to ignore market turbulence and the storm of "expert" advice it generates – especially when your portfolio is suffering. The best way to build wealth over the long run is to follow a disciplined long-term investing strategy with an appropriate asset allocation for your time frame, objectives, and risk tolerance.

No journey is without danger, and when you're investing, there's always the risk that you'll lose money. But you stand a better chance of staying on track by keeping emotion in check and avoiding some common mistakes:

Market-timing. You can't predict the market, so resist the urge to make major changes to your portfolio on a whim.

Chasing performance. Basing your investment decisions on what the market did yesterday is like trying to drive by looking only in your rearview mirror.

Miscalculating risk. Know your risk tolerance and allocate your assets accordingly.

Overweighting. Are all of your eggs in one basket? It can be tempting to load up on one particular type of investment, especially when that investment is doing well. But in doing so, you could be inviting misfortune.

It's not always easy, but having a plan – and the discipline to stick to it – is the best way to reach your financial goals.

Written by Mark Salter