Did you know that boring investing is probably the best way to invest money? Slow and steady aka long term consistent investing has been proven to realize the best year over year returns. In contrast, people who time the market, buy and sell, look for the hot stock, generally earn 7% less than those who do boring investing like investing in index funds. That is why I say boring investing is the way to go, because it allows a stress free money life. Boring investing is a set it and forget it, with proper allocation long term strategy.
In a recent study done by fidelity’s 401K division, the accounts that performed the best over a span of a decade were the accounts of clients who passed away or forget about the accounts. Just let that sink in my readers. If you don’t touch your investments, move them, time them, guess what you will grow them.
I must admit I am guilty of trying to outsmart the markets too, as in the past I bought and sold funds, based on trying to own the fund with highest paying dividend amounts. If 1 fund paid more than the other fund, I would be pissed that I lost out on the opportunity to get more dividend income. I know for a fact I missed out on a lot of gains because I tried this foolish game of timing funds and would divert some money to go places that didn’t serve me best as far as capital appreciation goes.
Now going forward I am going to do more of the boring investing and instead will just increase the total investing contributions year after year until I can retire. Who wins the race at the end of the tortoise and the hare story?
You guessed it the slow and steady tortoise because that’s usually how it goes as you keep a steady pace. If you rush rush rush out the gate, you will feel burnt out and you might fall short. The markets are no different, and I think that story is a classic example of stock market newbies, who think about get rich quick schemes that rarely work.