If you follow the latest news on investing, you’ll see all sorts of exciting opportunities to catapult your wealth.
You’ll hear about 15-year-olds who are now millionaires because they put what little money they had into an obscure cryptocurrency coin. You’ll find out about how you missed out on the latest meme stock that Reddit users flocked to and created a short squeeze.
You’ll also see many predictions about which investment is going to the moon next. However, the best investment results often come from a more boring approach.
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TikToker and personal finance coach Delyanne Barros, otherwise known as Delyanne the Money Coach, has some investment advice that might not be too exciting until you see the results.
Her short TikTok video said: “In October 2019, I opened a brokerage account. I made a purchase of 70 shares of a boring index fund of $19,641. Those 70 shares are now worth $36,896. That’s a 53% return for the last four years. When it comes to investing, boring is a good thing.”
Making boring investments sounds easy enough on the surface, but long-term investors must possess several things to find success:
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Patience
Maximizing your investments takes a long time and requires patience.
Day traders who try to time the market by buying low and selling high might make lucrative trades once in a while, but investing over the long term is a much safer and more rewarding approach.
Long-term investors take advantage of compound interest, which is when your initial investment generates interest that gets reinvested. The next time that investment earns interest, your initial investment and the previous interest generate interest.
This cycle repeats over time, creating a snowball effect and increasing profits, but it takes a patient investor to see it through.
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Consistency
Being consistent and sticking to your investment strategy is another principle for long-term success.
Making regular fixed investments over a long period of time is called dollar-cost averaging. You invest when your asset’s price is both high and low because in the long run, this will balance out in your favor.
Staying consistent allows you to continually put money into your investments without the stress that those who try to time the market feel. The discipline of making regular investments will also keep you on track to reach your financial goals.
Emotional Control
In recent years, the term FOMO, or fear of missing out, has been thrown around a lot.
When you get a tip that requires urgent action to maximize potential profits, you might feel compelled to invest in an unknown asset quickly so you don’t miss your chance to get rich. This FOMO causes many investors to make abrupt decisions that often result in losses, according to the U.S. Securities and Exchange Commission.
Being able to make rational decisions requires you to regulate your emotions. Controlling feelings of greed and fear will lead you to more sound decision-making.
A boring investor stays calm during the ups and downs of the market and sticks to their original investment strategy without overreacting.
Diversification
Diversification is an investment strategy that reduces your risk. It means spreading out your investments over multiple asset classes to offset market volatility.
Investors who hope to get rich quickly may put all of their money in a single stock or asset, hoping the price will increase and generate large profits. However, this type of investing comes with serious risks, as a drop in price could mean losing most or all of the money invested.
Diversifying your portfolio by investing in stocks, bonds, real estate, cryptocurrency, commodities, and other assets maximizes your safety. If the price of one asset drops, another area may rise, offsetting the negative effects.
Knowledge
Knowing what you’re putting your money into is essential for long-term and short-term investors alike.
Being familiar with the market and the assets allows you to determine when something is undervalued, creating opportunities to buy and make profits.
A deep knowledge of your investments allows you to make informed decisions that can help you manage risks and avoid hype. Educated investors can assess different market outcomes by monitoring trends and making the appropriate decisions.
Knowledge can lead to peace of mind in times of market volatility, when other investors may panic and sell.
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This article originally appeared on GOBankingRates.com: Money Influencer Delyanne Barros: Why Boring Could Be Best for Investing
