Index Investing: It’s Boring!

Even though investors know they should index their portfolios they still fail too. For a time I fell into this trap and actively managed my portfolio. I would pick random stocks that I felt would do well or rely on some random indicator. My excuse was that I enjoyed playing the market and felt that I could beat it over the long term. Indexing was boring, would doom me to mediocre returns, and I didn’t want anything to do with it!

Essentially my portfolio was a game. It was something that I used for entertainment purposes but with high risks and a high rewards. I suppose it was the dream that I could outperform all the millions of others and strike it rich; the modern day gold rush. The scary part was that I didn’t even realize that I was not investing but gambling.

Oh what a fool I was! It took a trip to Vegas for me to see the error in my ways. During that trip I lost a lot more money than I originally planned to. Ironically this was a good thing: It showed me that I love to gamble and tend to bet on long shot bets. This was how I ran my portfolio as I was holding around 10-15 stocks that I thought would outperform. Each of them was a long shot bet that may or may not do well in the future.

When I returned home I decided to dig deeper into the investment world and find out what else was out there. This is how I originally discovered index funds and actually started to learn how to invest. It took allot of time, research, and motivation but in the end I decided to invest in index funds, as I know they will do well, and leave the gambling for Vegas. Yes index funds are boring and I will not strike it rich. On the same token I will not die poor and will be able to meet my goals and retire at an early age. When it comes to my future I want an almost guaranteed return and not a roll of the dice.