Retirement Investing – 7 Reasons why you should be a Lazy Investor

Published on March 12, 2017 by Lauren

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  • When you think of the word “investing”, do you get intimidated? Well, if you have shied from Retirement Investing for one reason or another, let me break it down a little for you. It doesn’t have to be as intense and intimidating as it may have been.

    There are two main stereotypes we imagine when thinking about a person that is involved in investing:

    1. The person that reads the Wall Street Journal every day, watches the stock ticker randomly throwing around words like hedging, P/E ration, IPO, etc. They get really into it. We’ll call this person the “Researcher“. And,
    2. The person who just sets their investments on autopilot doesn’t think about it much and hopes it all pans out in the end. We’ll call this person the “Lazy Investor“.

    So who do you think ends up doing better with investing? The Lazy Investor, or the Researcher who buys low, sells high and always knows the exact balance and diversification of his portfolio at any given time?

    Retirement Investing – 7 Reasons Why you Shouldn’t Stress!

    The Case for the Lazy Investor: 

    The lazy investor doesn’t really know much about what they’re investing in. In fact, their so lazy, they don’t even actively make contributions towards those investments. They decided on the funds they would invest in once, set up auto-draft for their contributions, and then really don’t do anything.

    Is this type of investing responsible? Do people do this? Yes and yes. In fact,

    The richest and most successful investors in the world will tell you that the less you mess with your investments, the better.

    Warren Buffett once said, “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these.”

    Here are some pretty common questions people have at this point:

    retirement investing

    1. So what types of funds do you consider to be “Lazy”?

    Funds that aren’t actively managed are “lazy”. Exchange Traded Funds (ETF’s), also known as index funds are the most common example. More or less, they follow the overall market – whether it be stocks or bonds.

    2. What about diversification?

    Answer – they are already diversified. Many stock ETF’s are already invested in over 10,000 stocks and are automatically rebalanced (meaning stocks are sold high and purchased low) within the fund itself. So you do nothing except put your money in.

    3. When do you sell?

    What about the crash in 2008? What should I do if something like that happens again? You don’t sell. These funds are designed to hold forever and ride the ups and downs of the market. A lazy investor is a smart investor. He isn’t rattled by the day-to-day changes in the market. The lazy investor doesn’t overthink it. He just does it consistently and thinks long-term.

    4. Where’s the easiest place to start?

    The easiest place to start is your company’s 401(k) or 403(b) plan. Even if you’re in debt, even if you don’t have your emergency fund built up yet, you should at least consider contributing enough to get the most out of any available employee match. As for the funds – like I mentioned in the opening, I’m not an investment adviser. But just about every employer-sponsored plan these days has some “lazy options” You should look at.

    5. What if I have debt?

    If you are still in debt, your best return is generally going to be found in making it a priority to get out of debt. And once you’re out of debt and you have a reasonable emergency fund in place, then there will be many other avenues you can look at and consider.

    Today is a great time to live in for super-lazy investors. Recently, there have been quite a few super-low fee robo-advisers pop up that make it easier than ever. Betterment, Wealthfront, and Schwab Intelligent portfolios are super low-fee,  very easy to set up. You literally answer a few questions, link your bank account, and you’re ready to go. We use Betterment.

    retirement investing

    The Bottom Line:

    6. Who Performs better: the Lazy Investor or the active know-it-all Researcher?

    Better than you might think. Recent data provided found a really interesting statistic – teachers make great investors. While teachers are quite bright, it is not an occupation that requires any understanding of the stock market – yet they outperformed 80% of all investors on the platform.

    How? They left their investments alone. They made very few trades and were more diversified than the average investor. Basically, they were lazier.

    If you do a little bit of googling, you will see a number of studies comparing active investing to passive investing – it’s been a pretty hot topic over the past few years. But if it’s even a debate as to which form of investing is better, then why not just be lazy? Even if your actively managed portfolio doesn’t require you to know much, you’re still putting a lot of faith in the fund manager. I’d rather just have it on autopilot.

    7. Should I learn the craft of individual trading myself?

    Eh. I don’t feel a need to. There are plenty of wealth managers out there who can probably consistently beat the market. But that’s not me, and that’s probably not you. If I tried to trade individual stocks, buying low, selling high, and trying to time the overall market, I’d be broke! And there are many wannabe investors out there who are broke because of exactly that.

    I don’t need to outperform the market. Performing right along with the market is just fine with me, and it’s probably fine for you too.

    So don’t be scared of investing in your future. In today’s age, it doesn’t have to be a scary thing. Just be consistent… and being lazy might actually help too.


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