Boring Is Beautiful

by Neil on December 15, 2008

Iwas chatting with a colleague the other day about retirement planning and pension options. Given all the market turbulence these days it’s a conversation that we’ve been having frequently.
During the course of our conversation my colleague made the following statement:

“You’re pension should be boring.”

This got me thinking that boring really is beautiful.

We all dream of retiring rich. It’s a great beautiful dream and wish it as a reality for all of us.

One of the ways to increase your odds of this beautiful dream becoming a reality is to be boring.

You heard me, when it comes to your investments be boring.

Remember, I’m not advocating a get rich quick strategy here. If you want that look elsewhere. What I want is for everyone to live successfully and that requires financial discipline.

Ok Neil, you’re thinking you want us to have a boring investment portfolio. Care to expand on that idea?

I thought you’d never ask!

  1. Boring is bonds. I know historically they have lower returns than the equity markets. There’s a reason, they’re safe. You need a bond component in your retirement portfolio to help mitigate the down side risk of the equity markets. How much of a percentage is up to you and your own risk tolerance.
  2. Boring is Blue Chip. That’s right the cornerstone companies not only of the economy but of your everyday life. You want to buy the companies you purchase from on a daily basis. Your consumer staples, consumer discretionary companies. If you shop there and you know your neighbours shop there, buy the stock. These companies usually pay a reasonable dividend and have good long term growth prospects.
  3. Boring is asset diversification. Get your fingers into all the pies! I was once told you can’t go wrong with bank stock. While I agree with that (I do work for a bank), if it’s all you own you’re probably hurting right now. You need asset diversification, when oil is up, gold is down and vice versa. You need to be properly balanced so that a downturn in one sector doesn’t sink your portfolio.
  4. Boring is global diversification. I live in Canada and I have many clients who don’t want to invest outside of Canada as we’ve done well over the past few years. This blows me away, while we’ve done well we’re only 3% of the global economy. You need the other 97%!  Many clients are afraid of investing in the US, to that I say my US Blue Chip Equity Fund has lost the least amount of value in my total portfolio. These companies are still making money, just not as much. Other people don’t want to invest in emerging markets because they’re ticked the manufacturing jobs have all moved due to cheap labour. To that I say, tough, it’s going to happen anyways you may as well profit from it. You get the point, global diversification.
  5. Boring is investing for the long haul. Time in the market, not timing the market. Until the recent crash occurred North American equity markets had returned around 9.4% over the last 10 years. The average equity investor earned approximately 4.5%. Why? They tried to time the market. Give up on that, just invest regularly and stay invested!
  6. Boring is scary as hell! Boring is riding this market turmoil out and not panicing. Your retirement portfolio is the only thing you will sell low and buy high. DO NOT SELL your investment portfolio off right now and try to time the upswing (see above) you’ll miss and loose out on ever recouping  your losses.
  7. Boring is not listening to market updates on a daily basis to see how your investments are. Doing this will drive you insane. It is also not listening for the media to tell you when the market is recovering or the rescission has ended. They will have missed that by about 6 months. Read the points above again and stay invested.
  8. Boring is recognizing when to buy value. It’s boxing day at the stock market, but becareful there are a lot of duds. So if you are going to pour some extra cash into the market right now buy Blue Chip or do your research really well.

Remember Boring is Beautiful when it comes to your retirement planning. Keep it that way and you’ll finish rich.

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{ 6 comments }

Tess Marshall 12.15.08 at 7:59 am

Neil,
No. 5 has been tough especially when I’ve seen friends do this. No. 7 needs to be put in bold! Well thought out and written article.

Tess Marshall’s last blog post..65 Ways To Detox Your Mind For Mental Clarity

Bhing 12.15.08 at 8:25 pm

Yes, a boring life could be a very beautiful one when you already planned ahead about your retirement and you will have all the benefits when that day comes..

Bhing’s last blog post..Compilation of PTC News/ Updates (updated)

Barbara Swafford - Blogging Without A Blog 12.15.08 at 10:50 pm

Hi Neil – I love how you reminded others to do their homework. Too often we want others to help make us rich and we put all of our trust in them. By doing our own research we can rest peacefully at night knowing we have our finger on our choices.

Barbara Swafford – Blogging Without A Blog’s last blog post..Are You A Blogger or A Gossip

Eric Hamm 12.17.08 at 9:12 am

This is kind of ‘simplicity for investing’. Just keep it simple and sound, keep your eyes open and make small, positive steps toward a solid financial future. Very sound advice and great tips to back it up. Eric.

Eric Hamm’s last blog post..The Rats Stole My ‘Stuff’!

Pensions 06.03.10 at 3:42 am

This is very simplicity, simple sound
positive steps towards the financial future for us !
Good tips to us !
Thanks for sharing ..
.-= Pensions´s last blog ..CARDWATCH =-.

Alley Hastings 07.10.10 at 7:39 am

I agree! investment is boring…
I have variable life insurance (insurance + investment) that I have to pay for the next 8 years (coz I’ve done 2 years already). But I must say that its beautiful though its really boring! hehehe

thanks for sharing.
.-= Alley Hastings´s last blog ..With Profits =-.

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