Most investors who are able to optimize their success use a very simple approach. If you want success in investing, you too will need to be a boring investor. Heres why.
WHAT DOES A BORING INVESTOR LOOK LIKE?
A successful investor conducts actual research on different investment strategies before creating a financial plan. A successful investor will also commit to a single investment strategy, rather than changing with the market’s volatility.
This type of investor will often pay less in fees and make wiser decisions, which yields much higher returns over time.
BEING A SUCCESSFUL INVESTOR REQUIRES DISCIPLINE
In order to be a successful investor, your strategy must be excruciatingly boring.
Unfortunately, being bored is extremely difficult for many investors. Consequently, their focus tends to fall on trendy or extremely high risk investment strategies. These include high growth penny stocks, cryptocurrency, and marijuana.
Why do people do this? Why do they jump from one investment strategy to another – never even bothering to see through the merit of their idea?
The answer is simply that the alternative is extremely boring, hard work.
Proper investment research requires deep analysis of a company’s financial statements, using measures of profitability and certified accounting practices. Alternatively, many investors blindly choose to buy shares of popular companies such as Tesla and Amazon because it is the easier thing to do.
To those who conduct proper research, it is clear that creating a low cost, diverse, buy and hold portfolio is the most profitable and risk mitigating investment idea.
A BORING INVESTOR WILL NOT MAKE THE NEWS
Everything i’ve talked about so far explains why so much of today’s financial media is “fake news.” Real financial advice is boring and repetitive. There are no shortcuts to financial peace of mind, and that type of material isn’t great for click bait.
Consumers want to be told how to become rich now, they don’t want to hear the same thing over and over. People want to hear something new and exciting, and if they don’t find it, they quickly walk away and look somewhere else.
How long do you think CNBC would stay in business if the daily headline was constantly talking about how low-cost, buy and hold investing constantly outperforms? Sadly, not too long.
As a result, the only way these outlets can continue their existence is through screaming about the latest, most interesting investing trends such as marjuana or bitcoin.
Let’s face it: real financial advice is very, very boring. But, it works. That’s why we recommend hiring a CFP to manage it all for you. Financial entertainment often gets confused with real advice, and it is easy for people to get mixed up in it all.
But, as we’ve stated, financial entertainment is NOT the same thing as financial news. Is paying your taxes on time fun or entertaining? Of course it isn’t. It’s super boring but it saves you headaches later down the road.
Are you going to hear that on the financial news tonight? Nope.
FINANCIAL ENTERTAINMENT DOESN’T MAKE YOU A SUCCESSFUL INVESTOR
If you are going to take away anything from this blog, make sure your financial plan and your financial entertainment lead separate lives.
If you want to be successful, do not follow the crowds and buy into the “next big stock pick” from media investing gurus who are paid to get your attention.
Make sure your investments are boring, and you’ll almost always end up on top.