Retirement Investing: When boring is good

If a friend describes the latest spy novel as “about as interesting as watching paint dry,” or a review says the plot of an award-winning film “is like watching grass grow”—you take that information as a warning. The book and the movie are boring. And the last thing you want when you’re looking for entertainment is to be bored.

But when it comes to managing your finances and saving for retirement, boring is good.

First of all, it’s proven to be the most effective way to invest for retirement. A disciplined approach where you save systematically and hold a broadly diverse portfolio is the exact opposite of get-rich-quick.

And its long-term payoff comes from doing little in reaction to market moves.

“In almost everything else we do there’s a payoff to activity,” says Morgan Housel, author of The Psychology of Money. “If I want to be a good runner, I should run every day. But if I want to be a good investor, the thing for (me) to do is not trade, not tinker, just leave it alone.”1

Second, being boring keeps you from making rash decisions, usually out of fear.

As Nerdwallet’s Sara Rathner writes, “Obsessing over every market move is exhausting and counterproductive.”

When you feel like you have to take an active role, there’s no end to the financial media you need to stay on top of. These outlets make their living on doom and gloom, further spiraling the cycle of anxiety.

Third, a boring system for your money allows you to get more out of life. When you automate the components of your long-term plan, it goes on building your nest egg whether you’re thinking about it or not.

As financial planner Meg Bartelt points out, money is not life. “Money is a means by which you live your life. The more complicated, changeable or scary your investments are, the more time you spend working on them, and therefore the less time you have to live your life.”

But being boring in your finances can lead to excitement where you really want it—the things you someday hope to accomplish.

Having a plan that’s designed to work steadily over time will supply you the resources and develop the discipline to achieve those adventures you’ve always dreamed of embarking on. It might be travel, a move, or a second chapter in your career.

We can help you set up the “boring” plan that’s tailored to your unique circumstances and timeline, and then help you stay on track toward your goals.

Sources:

1. https://www.nerdwallet.com/article/credit-cards/make-your-money-more-exciting-by-keeping-it-boring

Disclosure:

The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’) and Family Legacy Advisors, LLC (‘FLA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA and FLA portfolios may contain specific securities that have been mentioned herein. EA and FLA make no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.