When it comes to my brokerage account, I have one simple, straightforward investing philosophy: I want my investments to be as boring as possible.
This may come as a surprise to some, as many people in the financial world are interested in picking individual stocks to buy or other assets to invest in that they’re excited about and love to discuss (like cryptocurrencies).
I, on the other hand, do not want to take advantage of new exciting investment opportunities, nor do I want to hear about the latest and greatest asset class that’s sure to make me a millionaire.
Here are the two primary reasons why being boring is my preferred option when it comes to my investments.
1. I believe being boring is the best path to success
The biggest reason why I am glad to be a boring investor is because I believe that sticking with a simple, basic, tried-and-true investing approach is the best way to actually make money over the long term.
See, my boring investment portfolio consists almost entirely of index funds that track the S&P 500, which is a financial index made up of 500 large U.S. companies. The S&P 500 has produced average annual returns of 10% for decades, and it’s often viewed as a barometer for how the U.S. stock market is doing as a whole.
While I might do better than 10% on some investments if I opted for a more exciting investment portfolio, there’s no guarantee that would happen. And I’d also be taking on a whole lot more risk. Even most professional investors and fund managers cannot consistently beat the S&P 500, so why should I try?
2. I don’t have the time or interest to explore exciting investment opportunities
Another big reason why I am very glad to be a boring investor is that I don’t really have a lot of time or interest in researching different investment options.
If I had a more exciting portfolio, I would have to spend a lot more time looking into different companies to buy, studying their earnings reports, and keeping tabs on how they are faring compared with their competitors. I would need to be aware of what’s going on with my investments so I could make changes if needed, such as if the competitive landscape was altered or the leadership team of the business departed.
With my investments, I don’t have to do anything. I just buy an S&P index fund on a regular basis using dollar-cost averaging (investing a set dollar amount at regular intervals so sometimes I buy low and sometimes I buy high). I never have to think about my investment again after that, and I don’t have to do any research to pick it in the first place.
Now, if you are interested in investing and enjoy trying to beat the market, then you may want to take a different approach. But, being a boring investor isn’t just OK — it’s a great strategy. So don’t assume you need to be a stock guru to start building wealth in your brokerage account. I’ve done pretty well with my simple approach, and you can too.
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