The One Clear Benefit Of Being A Boring Investor
Getting in on the ground floor of the potential next big thing is exciting. The adrenaline rush of believing that you invested in the next Apple or Amazon is exhilarating. However, there are only a handful of Apple and Amazon opportunities, and they don’t come around very often. There is a major benefit of being a boring investor.
There have never been more options for investing in history than right now. Not only are there stocks and precious metals, but now there are also cryptocurrencies, special purpose acquisition companies (SPACs), and non-fungible tokens (NFTs). The promise of these new investment opportunities can drive individuals to put their money into unproven and risky situations. While it might be exciting to invest in GameStop and Dogecoin, there is a clear benefit of being a boring investor – peace of mind.
Being a boring investor means that you’re more concerned with steady, reliable wealth growth as opposed to flash-in-the-pan risks. Thinking you can get rich quick can pay huge dividends, but also has real downsides such as putting extra stress on your already stressful life.
Having to check on your AMC meme stock every hour because it could go to the moon or it could come crashing back down to Earth can be a draining experience.
“In almost everything else we do, there’s a payoff to activity: If I want to be a good runner, I should run every day. If I want to be a good painter, I should constantly practice,” Morgan Housel, partner at The Collaborative Fund and author of The Psychology of Money, told NerdWallet. “But if you want to be a good investor, the best thing by far for people to do is not trade, not tinker, just leave it alone — and I think that’s just so counterintuitive because it’s so unique to investing.”
Having your hard-earned money in volatile investments means that you’re always thinking about the prospect of losing everything, which is a strain on your well-being.
“Money is a means by which you live your life, not life itself,” Meg Bartelt, financial planner and founder of Flow Financial Planning, told the outlet. “The more complicated, changeable or scary your investments are, the more time you spend working on them or thinking about them, and therefore the less time you have to live life.”
Obsessing about your risky investment can turn into more work than what it is worth. Practicing boring investing provides more serenity in your life and unshackles you from the unpredictability of high-risk/high-reward investments.
“You don’t want to be jumping in and chasing fads, because that’s typically when you end up losing money,” Chris Browning, founder of the podcast Popcorn Finance, told Grow. “There’s nothing wrong with being boring” when it comes to your investment strategy, he adds.
“If you just do something so simple, something that you don’t even think about, like investing in index funds for your work’s 401(k) plan — like something that’s so boring that you don’t even think about — that’s gonna be the best thing to set you up for your future,” Browning advises.
Christine Benz, director of personal finance at Morningstar, declared, “A better way to get started in investing is actually really boring. Buy a plain vanilla index fund or maybe a target-date mutual fund. It’s not a sexy message, but it’s one that’s been incredibly effective for a lot of investors for many years.”
Ben Carlson, a CFA and author, echoed the sentiment, “The slow, boring, ‘get rich slowly’ path is still probably the right path for the majority of people.”
Even the investment maven and the Oracle of Omaha – Warren Buffett, recommends investors seek out low-cost index funds. “In my view, for most people, the best thing to do is to own the S&P 500 index fund,” Buffett said at the annual Berkshire Hathaway meeting in 2020.