10 Tips for Lazy Investing in 2024
Updated August 15, 2024
All products and services featured are independently selected by WikiJob. When you register or purchase through links on this page, we may earn a commission.
- A list of the Top Brokers for Lazy Investing for October 2024:
- Description of the Best Brokers for Lazy Investing for October 2024
- 10 Tips for Making the Most of Your Lazy Investment Portfolio
- What Is a Lazy Portfolio?
- What Are the Benefits of a Lazy Portfolio?
empty
empty
empty
empty
empty
- Frequently Asked Questions
- Final Thoughts
A list of the Top Brokers for Lazy Investing for October 2024:
Description of the Best Brokers for Lazy Investing for October 2024
1. Pepperstone
Best for: Tight spreads and low fees
Pepperstone requires no minimum deposit and offers low trading fees.
It offers fantastic market analysis and trading ideas.
While the educational tools are adequate, the news flow is basic.
Customer service is available via phone, email and live chat, and all queries are answered promptly.
It is regulated by the FCA, ASIC, CySEC, BaFin, DFSA, CMA, SCB.
Pepperstone uses TradingView, MetaTrader 4, MetaTrader 5 and cTrader platforms. MetaTrader is considered one of the best CFD platforms.
It provides access to 25 major stock indices, more than 900 shares CFDs, 21 cryptocurrencies, over 100 ETFs and 17 top commodities. All assets are in the form of CFDs.
2. XTB
Best for: International trading
XTB is a trusted all-around broker, established in 2002. It is regulated by the FCA and listed on the Warsaw Stock Exchange.
There is no minimum deposit for opening an account.
XTB uses its xStation 5 platform, which offers good customisation, search functions and modern design.
As a platform, it has all the standard educational resources and research tools.
It has over 2,000 stocks, though all cryptocurrency trading is paused on weekends.
Overall, the only negatives of XTB are that its fundamental data is limited, and there are high fees for some CFD trades.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
3. IG
IG is a great share trading platform for beginners thanks to its user-friendly interface and extensive educational resources.
Pros of IG include a wide range of trading instruments and markets, as well as the ability to access multiple account types and trading platforms. The platform also offers a demo account for beginners to practise trading strategies before investing real money.
However, IG isn’t the cheapest share trading platform, with relatively high trading fees and a minimum deposit requirement of £250 when paying by credit/debit card or PayPal.
In terms of additional fees, IG charges a commission fee for share trading, starting from £8 per trade. There’s also a custody fee of 0.25% per year for holdings of £250 or more.
Overall, IG is a solid choice for beginners looking for a user-friendly platform with extensive educational resources, but investors should be aware of its fees and minimum deposit requirements.
4. Coinrule
Pros
- Works with a range of cryptocurrency exchange platforms
- Free account option available
- Various subscription tiers available to suit different needs
- User-friendly interface
Cons
- Monthly subscriptions can be expensive
- No mobile app
Fee: Free with a starter account or from $29.99 per month
Coinrule's Black Friday Offer
With its simple, intuitive design, Coinrule is a good choice for those who are new to trading as well as more advanced traders.
Users don’t need to know any code to set their trading rules.
Coinrule is web-based and works across several cryptocurrencies as well as supporting some of the most widely-used exchanges, such as BitMex.
5. Tradex
Tradex is a premier financial services firm that has created a social investment community. With a full range of help available depending on your needs, you can invest and manage your portfolio yourself with the online platform and tools or have face-to-face contact with your Investment Manager.
With Tradex, you choose and buy your stocks, guided by your Investment Manager. These will sit in your portfolio, which is then managed by the Tradex team based on your financial goals, with a strategy devised to help you achieve them. Their smart strategies and sophisticated technology give you broad exposure to different market sectors so you can diversify easily and have more chances to build a strong portfolio.
The membership plan can be paid monthly (25 Euros) or annually (250 Euros). The membership includes:
- Personal portfolio manager
- Client Portal
- Recurring membership
- Portfolio management
- Personal investment portfolio
- Stock recommendations
- Weekly appointments with an advisor
- Stock trade ideas
- Investment set up
Aside from the membership plan, the Tradex blog has a vast range of educational articles about everything from investment basics to things like NFTs and cryptocurrency so you can improve your knowledge and learn more about different investment opportunities.
Many savvy investors are turning to lazy investing strategies in a bid to earn as much money as possible with minimal effort.
Unlike traditional investment strategies that offer a fast-paced, high maintenance, ‘get in, get out’ strategy, lazy investing involves finding long-term portfolios that require little upkeep.
10 Tips for Making the Most of Your Lazy Investment Portfolio
If you’re keen to get started, here are a few practical tips on making the most of your lazy investment portfolio:
Step 1. Save a Percentage of Your Earnings for Investing
You already know that the quickest way to make the most of your investment is to continually add more money to it – after all, the greater the investment, the bigger the reward.
But how can you add to your investment without impacting your disposable income?
Rather than using your savings to make a one-off investment, why not reduce your spending each month and add a little to your portfolio?
Even a mild adjustment such as five to 10% of your monthly take-home salary could be enough to make a difference.
Thanks to the wonders of compound interest, as your investment fund grows, so will the gains, rapidly increasing your portfolio.
Step 2. Use Tax-Efficient Savings and Investment Accounts
Before you start your lazy investment portfolio, make sure that you speak to a qualified financial advisor so you can feel confident that you are making any investments in a tax-efficient way.
There may be specific savings accounts or investment accounts that you can use to protect your gains from being raided by the taxman.
Different states may have different rules, so you must seek financial advice before you begin.
Step 3. Invest Gradually
Your lazy investment portfolio is designed to be a long-term investment plan, often lasting 10 years or more.
Therefore, take your time. Don’t feel pressured into placing all of your savings into an investment in one go.
You may wish to invest gradually; this will give your fund time to grow in a low-risk way, minimizing the impact of any potential losses.
An easy tip for adding to your investment portfolio gradually is to invest some of your earnings (see tip #1) or to set up a small, regular direct debit payment.
This will allow you to see your returns increase, whilst having minimal impact on your day-to-day finances.
Step 4. Keep Costs Low – Invest in ETFs and Index Trackers/Index Funds
The beauty of lazy portfolios is that they are easy to run and cheap to manage.
Pay close attention to the type of investment that you make – some investments are ideally suited to lazy portfolios because they are accessible and affordable.
The most common types of investments are exchange-traded funds (ETFs) and other index funds because they do not need to be actively managed. They can take care of themselves with minimal effort.
Index funds are designed to try and match the performance of the index, not beat it. This means there’s considerably less risk involved or reliance upon the personal performance of a fund manager.
There are also cost implications involved in using index funds. Because you are spending less time researching the stock market or buying and selling your shares, the expenses are much lower. This means that you do not need to spend as much money to make money.
Step 5. Diversify Your Portfolio
As your lazy portfolio grows, you should be aware of how to diversify it to maximize your gains.
When you first start, you are likely to only have one or two funds to manage. However, as your investments start to grow, you may wish to expand your portfolio further.
This is advisable so that you are not reliant on a single stock market or economy.
There can be advantages to investing in specific stock exchanges, especially if you want to focus on your home country’s economy.
However, if you diversify your portfolio over major markets, you will have access to many different currencies and therefore a greater opportunity to achieve positive returns.
It’s worth noting that the US accounts for approximately 50% of the available markets. Therefore, you may wish to include a US index within your portfolio alongside any of the other major exchanges.
Step 6. Consider Blue-Chip Companies that Traditionally Pay Large Dividends
There is perceived safety in investing in large blue-chip companies that consistently rank at the top of the major stock exchanges.
Global corporations such as Shell or Unilever are also considered a ‘safe’ investment choice because they can pay large dividends to shareholders as their performance increases.
These large firms are less likely to cut any dividend payments if they have poor results because they have factored share-price fluctuations into their strategies.
As a result, you can feel more confident that you are likely to receive a decent payout, regardless of your investment size.
You can then choose to reinvest this payment into your lazy investment portfolio, helping you to rapidly increase your fund size and your overall wealth.
Step 7. Avoid Reacting to Market Changes
If you are looking to benefit from a lazy portfolio, a key tip is to avoid monitoring the stock market regularly.
Checking your investment regularly has been proven to yield worse results.
This is because you may start to worry about share-price fluctuations which could cause you to make emotional decisions. This can adversely affect the impact of your lazy portfolio.
Active fund managers have to spend time focusing on the market because they are benefiting from a high-risk investment choice. But lazy portfolios are designed to withstand many changes in the market.
If you are reinvesting your gains back into your portfolio, you need to allocate enough time to see the benefits. The longer your investment is active in the market, the greater the rewards.
If you start to monitor your portfolio performance too often, you may start to question your strategy and pull your investment at the wrong time.
Step 8. Reinvest Gains and Interest
Unlike other investment funds, a lazy portfolio isn’t about generating an income. Therefore, you may not be relying on the share price to fund your lifestyle.
An easy way to add to your investment portfolio is to put your earnings back into your investment.
Each time you reinvest your earnings back into your investment portfolio, your future gains will increase. Over several years, this can make a big difference to the overall size of your investment, and therefore your wealth.
For those who are taking a long-term approach to investment strategies, this is the best way to make the most of your money without impacting your day-to-day lifestyle choices.
Step 9. Patience
Lazy investment portfolios are designed for long-term benefits, not short-term gains. Therefore, you need to have patience and confidence in your investment choices.
You need to be confident that your investment will fluctuate but also give it time to recover from those changes. It’s a fact that shares often perform at their best directly after their worst performance.
Your patience could also be a virtue. After all, you never know how businesses may change in the future.
Those small businesses you invested in at the start of your lazy portfolio may have significantly changed within a decade, giving you enormous returns on your investment.
Can you imagine how much your wealth would have soared if you had invested in a small online retailer called Amazon 10 to 15 years ago?
Step 10. Remember to Rebalance Your Portfolio
Our final tip is to rebalance your portfolio regularly. This means giving your lazy portfolio a bit of tender loving care and making sure that it remains in balance.
You should try to rebalance your lazy portfolio once every year or two.
As you are making the most of a passive investment strategy, you shouldn’t expect to see huge differences over a few months. But over 12–24 months, you may see changes, so it’s important to set reminders to rebalance your portfolio at regular intervals.
As an example, when you started your portfolio, you may have invested in four distinct funds – allocating 25% to each fund. As your portfolio starts to grow, you may find that the initial 25% allocation has become unbalanced. Some of the four funds may be worth 50% of your portfolio, others may have reduced to 10%.
You should regularly return your portfolio to the initial balance (25% each) so that you are not exposing your investment to unwanted risk.
If your high yield starts to fall in price, you could lose a lot more money than you were prepared for.
Similarly, if your low investment starts to make gains, you want to take advantage of this as much as possible.
Simply put, this means that you are selling off your successful stock (at its high price) and purchasing your unsuccessful stock at a lower price.
This diagram shows how your lazy investment could change, and why you should bring it back in balance.
Starting allocation: You begin with four investment funds, each receiving an equal proportion of funding:
As your investment changes, some funds may outperform others. Whilst the high-performing funds give a greater return, you are also exposed to a higher risk. The poorly performing funds may begin to improve; with a smaller investment, you may miss out on some of the gains as they improve.
To rebalance your portfolio, you should sell some of your high-performing stock and reinvest the funds to ensure equal distribution across your initial allocation. You will now have a greater investment across each fund compared to your starting point, but your risk levels are rebalanced.
What Is a Lazy Portfolio?
A lazy portfolio is a set of investments that manage themselves. You do not need to be concerned with the investment’s performance on the stock exchange, and you do not need to actively make trades to maximize your income.
Lazy investing is a passive investing strategy aimed at long-term investors.
Typically, an investor will make their investment and wait up to 10 years (or more) before selling their shares.
This lengthy timeframe provides ample opportunity for the investment to grow significantly. It also means that the investor does not need to worry about the short-term performance of the stock, as they have confidence that any fluctuations in share price will rectify themselves.
Lazy portfolios are known to generate positive returns, often exceeding the performance of short-term investments. They are also deemed to be less risky.
They can be an effective strategy for those who want to invest but do not have the time for, or interest in, managing a complex investment portfolio.
What Are the Benefits of a Lazy Portfolio?
There are many reasons why an investor may choose to take a long-term approach to their investment strategies:
Time-Effective
A drawback of many investment strategies is that they can be time-consuming. Actively managed funds require a lot of monitoring and understanding of the marketplace.
Societal issues (such as the coronavirus pandemic) or political turmoil can cause significant issues for the stock market, and you need to know when to withdraw your investment.
This continual monitoring can take a significant amount of time, even if you are working with a trader to manage your investment portfolio on your behalf.
Above-Average Returns
As we mentioned earlier, lazy portfolios can provide above-average returns, especially compared to other investment strategies.
This is because you are giving your investment time to grow. If your investment does take a dip, you are allocating time for it to correct itself.
The lengthy timeframes involved in lazy investing mean that they are commonly used by investors seeking to establish an effective retirement fund.
Low Maintenance
A lazy portfolio is incredibly low maintenance. You simply invest and forget about it until the time comes to cash in.
The ease of this kind of investment is why lazy portfolios are often used by novice investors who want to invest their money wisely but aren’t sure how to manage an active portfolio.
As lazy investments take time to grow, investors often make relatively simple portfolio choices. They typically have a small number of assets and this helps them to keep on top of their investment choices.
Low Cost
Due to the simplicity of the portfolios, the start-up costs are significantly lower than other investment strategies.
Typically, most lazy portfolios consist of cut-price index funds or Exchange Traded Funds (ETFs).
This means that there are no high costs involved to take a large percentage of any returns on your investment.
Low Risk
There are a few reasons why a lazy portfolio is considered low risk.
-
First, the investment period is far longer. This gives your fund time to grow, shrink and grow again. There is enough time within the investment period to overcome any short-term fluctuations.
-
Second, you are less likely to be ruled by your emotions. Unlike active funds where you need to monitor your portfolio daily, you’re unlikely to be impacted by emotions such as greed or fear. You can rely on your lazy portfolio to manage itself regardless of any fluctuations in the economy.
Lazy investing is a long-term investment strategy that requires minimal effort and time commitment from investors.
It typically involves investing in a diversified portfolio of low-cost index funds or exchange-traded funds (ETFs) that track broad market indices.
Examples of lazy investing include investing in a target-date fund, which automatically adjusts the asset allocation based on the investor's target retirement date, and investing in a robo-advisor that manages a diversified portfolio of ETFs based on the investor's risk tolerance and financial goals.
Some common lazy investing strategies include the three-fund portfolio, which consists of a total stock market fund, a total international stock market fund and a total bond market fund, and the 60/40 portfolio, which allocates 60% to stocks and 40% to bonds.
The best brokers for lazy investing are those that offer low-cost index funds or ETFs, have no or low account minimums, and charge low fees for trades and account maintenance.
Some popular brokers for lazy investing include Vanguard, Charles Schwab and Fidelity.
The benefits of lazy investing include low costs, diversification and ease of management.
By investing in a broad-based portfolio of index funds or ETFs, investors can achieve market-like returns without the need for extensive research or active management.
The main risks associated with lazy investing are market volatility and inflation.
Although lazy investing can provide long-term returns, it may not be suitable for investors who need to generate income or who have short-term investment goals.
Additionally, a passive investment strategy may not outperform a more active strategy during periods of market turbulence.
To get started with lazy investing, you need to create a diversified portfolio of low-cost index funds or ETFs that match your risk tolerance and investment goals.
You can start by opening a brokerage account with a reputable broker, such as Vanguard or Fidelity, and investing in a variety of asset classes, such as stocks, bonds and real estate.
While lazy investing can help you build wealth over time, it is not a get-rich-quick scheme. It is a long-term investment strategy that requires discipline, patience and consistency.
You need to stick to your investment plan, avoid market timing and continue to invest regularly.
Lazy investing differs from active investing in that it involves buying and holding a diversified portfolio of low-cost index funds or ETFs, rather than trying to beat the market through individual stock picking or market timing.
You can start lazy investing with as little as a few hundred dollars. However, the more you invest, the greater the potential returns you can expect over time.
Lazy investing can be a good idea for a beginner trader, as it is a simple, low-risk and low-cost way to start building wealth over time.
You can combine lazy investing with other strategies, such as tax-loss harvesting or rebalancing, to optimize your portfolio and maximize your returns.
However, it's important to keep in mind that the more complex your strategy, the higher the risk and potential costs involved.
Final Thoughts
Lazy investing can provide significant benefits for investors who are prepared to take the time to see lasting effects.
It’s a great investment option for those who do not have the time for, or interest in, managing an active fund but want to benefit from a long-term investment opportunity.
For those wanting to invest or look ahead to their retirement, lazy investment portfolios can be the ideal choice.
It’s interesting to note that lazy investment portfolios can outperform active funds. This is because you are taking much more time over the investment and giving it ample opportunity to grow, without panicking over specific trading conditions or economic factors.
As with any trading investments, there are no guarantees and there is an element of risk. There will always be volatility and market losses, and a long-term investment strategy can help you to overcome any short-term losses or market fluctuations.
You may wish to think of your lazy portfolio as planting an acorn and giving it enough time to grow into a majestic oak tree. Each year, the seasons will cause the leaves and branches to fall, but with each passing year, your tree will grow bigger and stronger – much like your lazy investment portfolio.
WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
