Tuesday, August 01, 2006

Investing & Boring

I'm of the opinion that in general you want your investing to be boring. If your investing is exciting, that likely means that it also entails high risks. That doesn't mean that it necessarily has to be conservative. It just means that whatever investing instruments you decide to invest in should be done in a way that they limit the risks.

Some might consider stocks to be a risky investment, but if you purchase index funds that give you a breath of the stock market, you limit those risks (and fees) compared to picking individual stocks. There is absolutely nothing wrong with picking individual stocks if you have done your homework which most people don't have the time to do. In this case indexed stock funds make more sense even though they may be a bit boring.

Leave the excitement for investing for a small portion of your investment portfolio earmarked especially for that type of investing, but place the majority of your investments into the safest, boring stuff that matches your current investing goals.