When you think of the word ‘investing’ what do you think of? Does an image of a stock going up or down flash to mind? What about stories of other investors making tons of money, or losing lots of money? Or maybe stories about getting rich quick, or stories of getting rich slowly, over a long period of time? In today’s era of instant information and instant gratification, sometimes the stock market can feel boring. With news stories of the stock of Gamestop going from just a few bucks to a few hundred bucks in a few weeks, sometimes we can get a little antsy if our investments aren’t doing the same. 

It’s often though when we break out of our ‘boring’ investing strategy and into something more exciting that we end up losing money. Getting too risky with your investments is essentially gambling, at which point you’re basically just playing slots at a casino. In an effort to remind myself (and you if you’re reading) of why it’s often better to keep my investments boring, I wanted to jot down some thoughts. 

How boring are they?

For frequent readers on the blog, this story is a repeat so apologies in advance. I’ve always loved stocks, and do a ton of reading about them. I’d always heard that playing it safe with index funds was smart, but felt like I had the skills and knowledge to beat the odds. For a whole year, I tracked my stock trades and progress. I kept a portion of my money in an index fund (which is a basket of stocks that basically moves with the overall market) and also traded stocks as I saw fit. I read a bunch of articles, read a bunch on financial documents that the companies put out, and thought carefully about the broader market and where I expected things to go. I was proud of my trades and although I lost a little here and there, on the whole I felt like I was a successful trader. 

A year later, I compared how I did – the returns on my individual stocks (which are definitely more exciting), and the returns on my ‘boring’ index fund. Much to my dismay, my boring index fund outperformed my individual stock picks – enough to the point where I essentially gave up on trading individual stocks, instead putting it all in index funds!

From that point on, I have kept probably 95% of my investment money in index type funds. In my retirement, I have my investment money mostly in target date retirement funds. Outside of retirement, I’ve got my money mostly in index funds (mostly Vanguard for that matter – they are very affordable) and some growth mutual funds. Nothing fancy, nothing too exciting, just hopefully slow and steady growth! 

Why I’m ok with them being boring

Going back to my previous paragraph, I learned early on that it’s very difficult to outsmart the market by picking individual (exciting) stocks. I’ve come to have more perspective in life the older I get, and for me it’s all about risk mitigation – taking risks but not too many. I’ve got a house, a kid, a retirement and monthly bills that need to be paid. In my past investing, I’ve definitely had a few big wins, but I’ve also had a few big losses too. I feel like I’m less at a point to be taking big risks, and instead am focusing on what I hope to be a slow and steady increase in my investments. 

Historical trends have shown that index funds are a safe way to play the stock market, and that’s my main goal! 

What I do to ‘spice them up’ 

I do still read a ton about stocks and the overall economy. I subscribe and read Bloomberg’s Business Magazine weekly and each weekday at 9:30am, I’m checking to see how the stock market is doing. To keep my investment itch scratched, I do keep about 5% of my investment money in individual stocks. I call it my ‘mad money’ and find that it’s a great way to stay active in the stock market. It’s not going to affect the overall return of my entire portfolio in a meaningful way, and I know that the slow and steady returns of index funds will keep me on track. Outside of individual stocks, I did get into cryptocurrencies earlier this year to continue scratching the exciting investment itch that I have. 

Keeping a little bit of mad money allows me to still feel the excitement of investing in the stock market, while still knowing that I’m on track and playing it safe with index funds!  

Confused by any of the terms I mentioned? Check out my guide on investing for retirement that walks you through the basics and how to actually get started!