Why it’s okay to take a boring approach to money management

If you want to be a good investor, the best thing to do is leave your money alone, experts say

There will always be round-the-clock financial news, but not everything happening in the larger economy affects you as an individual. Turn off news and stock market alerts on your phone. Photo: Getty ImagesShow less

The idea of gaining wealth in flashy ways isn’t new. After all, Charles Ponzi, for whom Ponzi schemes were named, defrauded investors more than 100 years ago with a get-rich-quick scheme built on a foundation of lies.

Today, speculative investments, multilevel marketing companies and other risky efforts to turn a profit still lay traps.

You can always leave your money alone in an interest-bearing account and let time do its thing, but that doesn’t exactly make for exciting party conversations, does it?

So we open and close accounts. We invest in hot stocks and sell them at the first sign of bad news. We mess with our money because, in our minds, growing wealth is supposed to take effort.

“In almost everything else we do, there’s a pay-off to activity: if I want to be a good runner, I should run every day. If I want to be a good painter, I should constantly practise,” Morgan Housel, a partner at The Collaborative Fund and author of The Psychology of Money, says.

“But if you want to be a good investor, the best thing by far for people to do is not trade, not tinker, just leave it alone – and I think that’s just so counterintuitive because it’s so unique to investing.”

In a world full of financial influencers peddling products and friends bragging about buying non-fungible tokens, it’s perfectly fine to manage your money in a mostly yawn-inducing way. Here’s why.

Being boring gives you more time to live your life

Dealing with your money is a necessary chore and it’s not exactly fun. Thankfully, we live in efficient times. In a few minutes, you can set up automatic money transfers that quietly send your cash into separate accounts serving different purposes.

Why keep money management on your to-do list when it can happen on its own quite literally while you sleep?

“Money is a means by which you live your life, not life itself,” Meg Bartelt, a financial planner and founder of Flow Financial Planning, says.

The more complicated, changeable or scary your investments are, the more time you spend working on them or thinking about them, and therefore the less time you have to live life

Meg Bartelt,
financial planner

“The more complicated, changeable or scary your investments are, the more time you spend working on them or thinking about them and, therefore, the less time you have to live life.”

Being boring keeps you from making rash decisions

It’s important to take a peek at your investment accounts periodically, but obsessing over every market move is exhausting and counterproductive. It can lead to making reactive decisions that hurt your wealth in the long run.

Choosing to be boring with your money is an exercise in letting go of the illusion of total control. Yes, there will always be round-the-clock financial news, but not everything happening in the larger economy affects you as an individual.

Turn off news and stock market alerts on your phone so you no longer feel that itch to react. Instead, mindfully decide when to watch the news and check on your accounts so you can stay informed with less stress.

What boring money management looks like

Create a plan you (mostly) stick to: Ms Bartelt finds that whether her clients avoid their money or obsessively track it, it’s because they all feel the same emotion: fear. The antidote is a financial plan based on specific goals and values.

“Having a plan is reassuring,” she says. “Once they have the plan or once they know they’re going to have one, people relax.”

Base your savings and investing goals on what you intend to spend money on in the short, medium and long term. Leave wiggle room for life changes and other uncertainties because those are guaranteed to happen.

Prepare for emergencies: there’s nothing particularly interesting about emergency funds, life insurance and up-to-date wills, but should the unexpected happen, these things can help you stay financially steady.

Automate your money: transfer funds automatically from checking to savings or from checking to a brokerage account. Making regular contributions to different accounts and increasing them as your budget allows and goals shift will grow your nest egg.

Once you have your boring financial foundation in place, you can sprinkle on some riskier investments if you want. But remain faithful to your plan.

“You have to actively and continuously ignore the ubiquitous distractions, charlatans and blowhards in order to stay true to your own values and goals,” Ms Bartelt says.

AP