Lazy investing

Having read a post by another blogger, I thought, I haven’t seen much on lazy investing- not with a F.I.R.E stance anyway… I should write something about it, since I have some ideas- and here we are.

Investing does not need to take time!

So there are a number of caveat’s here- when you first start, it will take time- huge amounts of time. You need to do all of your research and decide what you are going to invest in, how you are going to do so and if you are going to re-balance your portfolio. Once you have decided the what/how, then it really doesn’t need to take any of your time at all- literally talking minutes per month. If you are spending more than this- then its not lazy investing!

Don’t I need a financial adviser?

If you go back 20 years, then there was very little choice for most “retail” (that’s another word for the average person) investors. Either you had enough money to hire a financial adviser, or you could use your bank. Either way, it was nearly impossible for you to invest directly into index funds (and there weren’t many of them in the UK either).

Fast forward 20 years, and now, there is so much choice you wouldn’t believe. We even have funds of funds, so with 1 single fund, you could be holding 10+ funds, with underlying investments in 1000’s of companies. The best bit? None of this involves paying a financial adviser at all! You can just go online, pick a broker, deposit some money, and off you go!

4 Steps to lazy investing

Step 1

Decide what you are going to invest in. This should usually be a index fund of some description. I’ve written about this before. Nothing stopping you from investing in multiple index funds, but if you are going to do that- there is probably already an index fund that will do this for you. Eg. if you wanted a 80% index fund and 20% bond, instead of recreating this manually, Vanguard has an offering that’s exactly that. Please give smarter investing a read if you haven’t already:

Step 2

Can you use a tax-free wrapper to buy this in? If the answer is yes, then it’s almost always worth using this. This is likely to either be a SIPP or ISA.

Step 3

Pick a broker to buy this fund(s) through. You will almost always want the accumulation version of the fund- this means your dividends are automatically reinvested. You will need to consider costs here- both purchase (based on frequency) and holding costs. Go for the cheapest broker according to your current situation- you can always transfer at a later stage. Either make the single payment, or setup your regular payment & instructions to buy the fund.

Step 4

There isn’t one, this is lazy investing- as easy & as lazy as it can possibly be.

Surely you think, it should take more effort than this? Well, only if you want it to. You probably want to keep an eye on it’s worth- but really, once a year is all it needs. You will want to think about re-balancing when you get to about 10~ years before (early) retirement, but until then- you shouldn’t mess with it at all. Anybody else that says it needs to be more complicated than this- is just wrong. Sure, you can make it as complex as you want, with re-balanced as frequently as you want. But all of that comes with additional cost (and time!) as well.

I hope you enjoyed this article & good luck with your investing.

Questions/Comments?

As always, please just comment below and I’ll try and answer.