Easy Approach to Investing That Could Earn You Millions!
Lazy investing is a popular approach for individuals seeking to build wealth over the long term with minimal effort. This strategy involves creating a simple, low-maintenance portfolio primarily composed of low-cost index funds or Exchange-Traded Funds (ETFs) that provide broad market exposure and diversify across asset classes.
One of the key benefits of lazy investing is its low-stress, low-cost nature. By investing in index trackers, which mirror the performance of the stock market, investors can avoid the stress associated with trying to beat the market and the high costs often associated with active management.
Ready-made portfolios offered by investing platforms allow individuals to pick a risk level and have their money spread across a pre-built mix of investments. This approach to diversification is crucial in investing, as it can be achieved without the need for extensive research into individual stocks.
Automating investments can be done through a monthly direct debit into a Stocks and Shares ISA or pension. This consistent investing, regardless of market conditions, is a recommended approach as it helps to avoid the emotional decision-making that can often lead to poor investment choices.
To implement a lazy investing strategy, there are five key steps:
- Choose a basic portfolio of low-cost, diversified index funds or ETFs. A common choice is the “three-fund portfolio” which includes a total domestic stock market index fund, a total international stock market index fund, and a total bond market fund.
- Automate your investments by setting up a recurring monthly contribution into your investment account.
- Consider using pre-built, risk-level-based portfolios or target-date funds offered by many platforms that automatically adjust your asset allocation over time without the need for active management.
- Keep costs low by using index funds or ETFs with minimal expense ratios and avoiding frequent trading or stock picking, which most professional managers fail to outperform over time.
- Rebalance your portfolio only occasionally to maintain your desired allocation but avoid the stress of constant adjustments.
Lazy investing minimises effort, avoids market timing, reduces fees, and harnesses the long-term growth of global markets, allowing wealth to build steadily over decades with minimal oversight. Ignoring the news (mostly) is also a recommended approach as it can help reduce stress and emotional decision-making.
Embracing a lazy investing approach can help build wealth without turning into a spreadsheet obsessive or market hawk. Turning off the financial news and checking your portfolio once a quarter can save your nerves and possibly your returns.
Using a robo-adviser or platform like Vanguard, Moneybox, or Nutmeg for automation is a recommended approach. For those interested in learning more about investing, our website offers a free, bi-weekly Investing Newsletter. (Note: This is not financial advice and readers should conduct their own due diligence.)
In summary, lazy investing is a strategic approach that uses time, automation, and low fees to your advantage, allowing you to let compound growth do the heavy lifting over the long term.
- Implementing lazy investing can aid in building personal-finance by leveraging automation, time, and low costs, allowing compound growth to contribute significantly over long periods.
- Choosing a platform like Vanguard, Moneybox, or Nutmeg for automated lazy investing can help individuals avoid the stress of constant portfolio management and enhance their business ventures by focusing on other areas.
