Tips, insights and information on general finance topics for better financial plans.
If not for the relentless erosive force of inflation and Financial Planning Software that won’t let me overlook that consideration I’d probably consider stashing all of my money in a mattress (otherwise known as a savings account) and live happily ever after. Maybe that’s overstating the case slightly, but for most people I certainly view investing as a necessary evil required to preserve what they have earned more than as an opportunity to get rich quick. As such it is unpleasant and often stressful. People get rich by creating amazing things that others value, by gambling (sometimes in the stock market!), but not by “investing” in the stock market or anything else available to the general public.
Why do I believe it is a good thing if you hate investing? Because doing it right feels lousy. Investing successfully is an unnatural act. When the market is high your every instinct will be to buy, when the market is tanking your every instinct will be to sell and get out. Successful investing requires you to ignore both of these impulses and that feels awful. If you’re doing it right, you’re always going to feel like you are making a huge mistake. This isn’t an anecdotal observation or opinion, there are reams of data demonstrating (and suggesting that due to emotional influences) that individual investors on average tend to do very poorly in the market vs. professionals and even just buying and holding indexes (which are roughly the same thing) due to this emotional effect. There’s a great Blog post on the topic here.
The flip side of this is that if you are having fun, you’re probably gambling! What makes us feel smart, euphoric, successful is when we beat the market and earn out-sized gains. Nobody gets all excited about achieving market returns, which is all a real investor should reasonably expect. The problem is that the market is designed to make this impossible to sustain. If you are making outsized gains you are taking out-sized risks and over time your returns will revert to the mean and your prior euphoria will be paid for by misery and stress (and probably a hit to your retirement plan).
So keep on investing, prudently, calmly and in a manner consistent with your long term goals and don’t worry if you feel like you’re missing out on something. You are not.