Sometimes Being Lazy with Your Investments Is Good

I usually write an article on weekly, but I skipped last week.

I could say that I’ve been ridiculously busy — several new clients (all physicians) started working with me, I held meetings with my existing clients, and a number of prospective, new physician clients called me —- but, in reality, I’ve just been lazy.

So it got me thinking.

Are there parts of your finances and investments you should be lazy about or maybe just plain ignore?

Obviously you can’t be lazy with everything in your financial life, but there are some areas that don’t have a good pay off for you if you focus too much on them. I will even go so far as saying that focusing on certain areas of your investments is a waste of your time.

Here are 5 examples:

1. Looking at your portfolio too often.

Neither you nor your financial advisor controls investment performance. The markets do that. So stop checking the performance of your portfolio every day or every month.

2. Paying attention to the economic reports your financial advisor sends you or that you hear about in the financial media.

Those reports tell you what happened in the past not what is going to happen in the future. You might think that you know a lot about the economy by reading these reports or you’ll mistakenly think that that you are sophisticated, but there are 7 billion people on this planet that make up the economy. You or your financial advisors cannot possibly grasp it and garner consistently higher investment returns in the long run.

3. Tinkering and tweaking your investment portfolio.

Changing your allocation from 6% in a particular investment from 5% isn’t going to have a meaningful impact on returns. Adding a new fund with $10,000 out of a $1 million portfolio will create more recordkeeping headaches than it’s worth.

4. Using a large number of securities.

Owning 50 different mutual funds probably won’t add much to your bottom line, you’ll get confused, and it will be harder to keep track of your portfolio. Four to 10 funds is all you need. The best bet is to go with the lowest number of securities that will help you achieve your goals — and no extra.

5. Banking on wild, baseless claims.

Plug your ears when a financial advisor claims he can beat the market, can time the market, can successfully pick the winning stocks, or identify the winning fund managers. If he can do that, then why is telling you? Shouldn’t he want to keep the profits for himself? Or is he just a super generous guy and wants to spread the wealth?

Lazy isn’t bad

There are lots of other ways to be lazy and successful with your investments, but the above list should give you a good head start.

If you or your financial advisor are focusing on some of the things I’ve described above, then you don’t have a solid investment plan.

So go ahead. Be lazy.