Investing: Don't Let Boredom Ruin Your Financial Health

As we get into the second half of the year, I’m reflecting on the market performance in 2023 as being reasonably good, but that is coming after 2022 which was not a good year of performance at all. If you invested in the market 2 years ago you would have had pretty much zero performance.

It’s well known that the emotions of greed and fear are enemies of your wealth plan because they will lead you to buy assets at bad prices, and sell assets at good prices.

But boredom with investing is your silent enemy. There are many people who can tolerate volatility in the markets but if their investments are going nowhere for 2-3 years, they conclude that the investments don’t work, and they should sell and get on board with something that is working, which reminds me of the saying “keep chasing performance and repeat until broke”

When I read investment content I feel that 99% of it is about how to choose investments to buy, but this is 1% of the job. It’s the equivalent of a pilot only learning how to take off. 99% of the job is what to do once you have bought the investments, to not give into the emotions of greed or fear, and especially right now to not let boredom give you cause to move out of a lane that is going to work very well in the long term.

A good thing to do if you feel impatient and bored with sideways movement, is to come back to your investments, and ask yourself or ask your adviser the following:

• Why did I invest in these funds/companies?

• Is the reason for investing still valid today? (has anything changed)

• Is the performance so far, a feature or a bug

If the investment performance is a feature and not a bug, and the investment reason is still valid the thing to do to fix your problem of anaemic 2 year performance is actually nothing at all. “

Ultimately, you get paid to do what others can’t, and the thing that others struggle to do the most with their investments is to “do nothing” Sloth is actually a virtue in the investing world.

Sometimes the market gives you negative years, and sometimes the market gives you years of going nowhere. Both of these expected occurrences shake investors out of excellent long term investments, so be aware of your emotions and if your investments follow a good process, backed up by good long term performance then “don’t just do something sit there!