Why Boring is Good When it Comes to Finances


by Don Smith

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Earlier this year, I was lured into the hype and bought some trending stocks, even though they looked overvalued to me. Hours later, trading was halted on those stocks, and I lost thousands of dollars in minutes as prices tumbled, at least on paper. I didn't panic sell and held several months longer before dumping them, so I only ended up taking a small loss, but it was a reminder that boring is good for finances.

I wrote about wealth building in the article, “Ten Steps to Creating Wealth: How I Added Six Figures to My Net Worth in a Year While Raising Five Kids, but the point that keeps being driven home to me over and over is that boring is good.

Boring Good Habits Lead to Massive Results

Showing up on time and doing what you say you're going to do day after day for years is boring. But it will keep you in a well-paid position or allow you to grow a business. Stick a portion of every paycheck from that boring position in a boring retirement account in a boring index fund for the next few decades, and you'll eventually be a millionaire.

A quick calculation using the average stock market return for the last 30 years shows you'd only need to invest $500 a month into a basic S&P 500 index fund to get to a million in 30 years. If you maxed out your 401k every year, the math says it should take less than 20 years to be a millionaire.

Calculation showing over a million dollars with only $500/mo investment for 30 years

Working out every day or at least several days a week and eating healthy stuff can be boring. But if you do it consistently, you'll get in shape. Showing up to work every day and investing a portion of the returns is boring as well, but if you do it consistently, you'll build wealth.

Some People Do Win the Lottery, but the Rest Build Wealth by Being Boring

Granted, some people have amassed fortunes virtually overnight by creating an amazing business or getting lucky with an investment, but those stories are similar to the lotto winners. Your odds are vanishingly small that you'll outsmart everyone else on the planet, including huge investing corporations with supercomputers crunching numbers and figure out who the next Amazon will be before everyone else does. But with some boring routines that many are not disciplined enough to follow, your odds of long-term financial success improve dramatically.

If you want to be healthy, include some physical activity each day and watch how much you eat at each meal. If you want to improve your finances, invest in your earning ability so that you're making a decent amount, then invest. It's boring stuff at times, but boring routines that you do every day are what ultimately lead to long-term success.

About the Author 

Don Smith

Happily married with five kids, Smith owns a technology company, has served on the board of directors for multiple companies, and loves playing soccer, hiking, and mentoring.

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