What Is The Smartest Way To Invest Money? Be Boring!!

The Investor Diary Entry #42: May 24, 2023

Today I want to zoom in on the concept of excitement. The idea of excitement interferes heavily with the concept of goal setting.

In the world of investment, as in any other area, you really need to know what you are set out to achieve. It is within this realm that lies the answer to the question of what is the smartest way to invest money.

When getting into investment, many seek excitement in the areas that they invest in. To seek excitement in what you are investing in is very dangerous as the excitement lies in achieving your financial goals not in investing in exciting instruments.

Exciting instruments carry the danger of hyped-up instruments or extremely volatile ones. Both areas are extremely risky, some experts even consider them as instruments that investors should shy away from.

Be Boring

Yes, you need to become boring. Choose a boring system.

In the phrase “choose a boring system,” what is the keyword? No, it is not “boring,” it is the word “system.” Another word for it is “process.” There is another word called “routine.”

The word “process” is usually used for business while the word “routine” is used for individuals seeking to achieve a personal goal.

The word “process” entails input, operation, and output. The word “routine” entails the repetition of certain steps designed to insure discipline to ensure attaining the desired result. These are not academic definitions nor do they distinguish between process and routine. Those are the common ways how I see people look at those two words.

In both business and individual goals a system, process, or routine needs to be designed to make sure that goals are being achieved.

Finding the most suitable routine does not happen overnight. For individuals, it is a matter of trial and error until one finds the routine that best suits that person. But a routine needs to be set in place to ensure consistency and persistence.

Being A Smart Investor

Many famous investors who have achieved tremendous success in their careers agree that the smartest investor can aim to win 60% of the time in his/her investing decisions and choices.

The concept of luck and risk has been repeated a lot by many of those investors. There is another concept that many investors agree on, is that you never know which of your investment choices will bring you the positive results that you are looking for.

Investors create portfolios, they talk about diversification, and they talk about picking the right choices and instruments. Why do they do all that? Because they don’t know for sure which of those choices will bring the desired results.
To be able to understand this better, let me look at the music industry. A singer will create an album. This album consists of several songs. The singer might have a view about which of those songs will make a hit, but the singer will not know for sure until the album is out. From the whole album, a couple of songs might hit the charts, this is if the singer is one of the famous ones and is regarded as a really good singer.

It is the same with investment. One never knows which item of the investment portfolio will make an upward run.

Tails, You Win

This is how Morgan Housel titled his sixth chapter, “Tails, You Win.” This chapter explains in detail and with supporting stories how an investor cannot aim to win all the investment choices made. An investor loses but hopes that the winning ones will cover all losing costs and make a profit.

It is in this chapter that Morgan Housel puts in front of us the famous investors who tell us what they think about smart investment and smart investors. In my opinion, you can read this chapter on its own and get its meaning, but there is a bigger picture in play in the previous chapter that builds up to arrive at this concept.

In this diary we have referred a lot to his book “The Psychology of Money,” and there were whole entries based on specific chapters of this book. The more I read the book, the more I am convinced that no one should think of investing without reading this book.

In my opinion, this book forms the first block of investing mindset. Even for people who are not interested in investing, this book’s chapters present a great way to mold our relationship with money regardless of our profession.

My Working Day Principles

I have designed different processes/routines for my working day, and two principles.

The first principle is one that I got from one of the value investors who I watch regularly and use their software to analyze stocks. He said that he makes sure that he finishes six tasks a day. I am not sure if he got this from a book, or he designed it himself, but he did mention “Atomic Habits” more than once.

The second principle is that I put the tasks that must be finished on that day first and then move down the priority based on which task can the least be postponed if I couldn’t get to it. Most of my daily tasks are time-consuming which is leading me to think that I must have a third principle.

The Third Principle is deciding on a time limit for each task. If I finish the allocated time, then I would move to the next. I am still contemplating this one.

In addition to the principles, I have made various processes/routines as my tasks are distributed among different work areas and not just investing.

Conclusion

I will not try to be a smart investor. My whole work is revolving around finding the best investing routine that will give me a chance to achieve my financial goals.

It is not my investing routine alone that I am working continuously, I keep evaluating my total working day routine, my stock analysis routine, my stock valuation routine, my blogging routine, my work routine for the other work areas, etc.

I also need a routine structure. I have high-level routines that govern my whole day including socializing and family relationships, lower routines, and detailed routines. If I can create a dynamic repeatable routine structure, I think that will spare me a lot of time thinking about my daily and weekly plans.

The whole idea is to become boring in my routines and exciting about achieving results.

The Investor

Wednesday 24 May 2023

About The Author

I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second, as a place where I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly, as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.

For more detailed information on my affiliate disclosure please refer to the Full Affiliate Disclosure page, and if you are interested in building your own online business you can check this post here.

Furthermore, this site is in no way or form giving any financial or investment advice, nor it is encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my progress and share it for informational, educational, and entertainment purposes.