A lot of excitement can come with investing. The thrill of seeing your stocks rise can give you a rush. However, you may also feel anxiety and despair when they drop.
Larry believes that when it comes to investing, boring can be better.
In this blog, Larry will cover why being boring isn’t necessarily a bad thing when investing — and how you could benefit from a “boring” investing strategy.
Why Can Be Boring Better When it Comes To Investing
Investing is not always fun and exciting. But being a “boring” investor can surely pay off well.
People often ask us:
- “What stocks should I be buying?”
- “Is it a good time to get in the market?”
But there is so much more you need to consider to make an informed decision like efficient market theory, evidence-based investing, diversified portfolios, time horizon, asset allocation, and rebalancing –– are you bored yet?
There are many factors that come into play when investing, which is why it is boring. However, deeply considering these factors and staying the course is almost always better than practicing risky investing.
Boring Funds versus Individual Stocks
Are you considering which you should invest in, boring funds or exciting individual stocks?
While making your decision, remember that, for the most part, individuals can easily get emotionally tied to individual stocks. This isn’t good when you’re looking at the long term and trying to rebalance your portfolio.
Plus, if you’re trying to time the market, chances are, it won’t work out in your favor. All the studies have shown it is nearly impossible to time the market, so we encourage you to try and avoid this strategy and instead go for a more “boring,” stable approach.
So, in this case: Boring funds = good, Individual Stocks = bad.
Why Boring Can Be Better When Creating an Investment Strategy
It can be boring to rebalance your portfolio using target allocations instead of trying to use your gut feeling of when you should move from one investment to another.
But this is exactly why boring can be better when it comes to your investment strategy.
People often react quickly and emotionally when it comes to the market, moving into the market when it's up and staying away from it when it's down.
We all want to buy low and sell high. But if you don’t have a strategy in place when things are going well, people just try to go with the flow instead of coordinating with their financial plan.
A “boring” investment strategy can help you avoid this and create the long-term success you’re looking for.