How To Make Your Money Work For You & Build A Stable Portfolio As A Lazy Investor
So, you want to build an investment portfolio from scratch? You don't need to obsess over stock charts to do this. In fact, some of the most successful investors are the "lazy" ones—those who just put their money in a stock or stocks they believe in, and let it sit there for years or decades. They don't wince at the natural ebbs and flows of the market.
Start with a plan
The first step to investing is to set a clear foundation for yourself. Ask yourself what you're saving for. Is it retirement? Your kids' education? A house? Then determine your timeline. When do you need the money by?
"That, to me, is the most overlooked question," Alan Green, head of exchange-traded funds at Dynamic Funds, told The Globe and Mail. ‘What are you trying to do and how long do you have to do it?’”
Finally, decide on your risk tolerance. How comfortable are you with the ups and downs of the market?
Younger investors have more time to recover from downticks in the market, especially if they're saving for something like retirement.
Set it up
Start by choosing the right platform for you. Choose a simple, user-friendly, and low-cost option like Fidelity or Schwab. Next, pick an account. For beginners, a tax-advantaged Roth IRA is often recommended because it offers tax-free growth and tax-free withdrawals in retirement.
Fund it by setting up automatic transfers, so a little bit of your paycheck goes into it every month without you having to think about it.
Diversify
The next step is diversification. Choose a mixture of stocks (growth) and bonds (stability). Younger investors can put more money into stocks because of their long-term growth potential, but older investors who want less risk may want to invest more in bonds. The key is choosing a mix you can stick with during market downturns. A portfolio only works if you don’t panic and abandon it when headlines turn scary.
For a balanced portfolio, consider the "core and explore" investment strategy. This blends stable "core" investments with more experimental, higher-risk "explore" bets. Core investments should make up about 80 to 90 percent of your portfolio as they're your foundation for long-term growth and stability.
For instant diversification, instead of picking individual stocks, you can start with broad, low-cost ETFs or index funds. This allows you to own hundreds or thousands of companies at once, reducing risk and smoothing out volatility. You can buy fractional shares if you need to start small.
Check in and rebalance
As a lazy investor, you'll want to use passive investing strategies, which is a long-term buy-and-hold approach. This has historically had better results than active trading, with lower fees and fewer headaches. However, using this method doesn't mean you can completely ignore your investments. You still need to check in periodically (quarterly or annually) and adjust based on your target allocation.
If you want to build a healthy investment portfolio that can contribute to long-term wealth, the key is patience. The market will rise, fall, crash, and recover multiple times over your lifetime. The biggest threat to your financial goals isn’t volatility; it’s pulling your money out at the wrong time.
Building wealth is "a lot easier than most people think," says Green. "Take a simple strategy of balanced investing over the long term and try not to touch [your portfolio] too much.”
