Updated: January 15, 2020
“The Philippine stock market reached a new high just today,” I told a friend whom I know began investing in the stock market last year.
“Yeah, I heard,” he answered.
“So how are your investments doing?” I asked.
“Very good actually,” he replied.
“So why don’t you sound too happy about it?” I inquired, sensing the lack of enthusiasm in his voice.
“Well,” he hesitated a bit, then finally told me the truth. “I didn’t expect that investing in the stock market would be boring.”
For a moment, I got amused and laughed at his sentiment. But then I realized his concern was serious, so I told him this:
“Indeed, investing in the stock market is boring. And that’s the reason why I love investing in it, because it doesn’t take away so much of my time and energy to do.”
When you hear the term “stock market”, the first image that comes to mind for most of us will be the chaos that we see in the movies and television – people shouting and talking on the phone, passing around countless pieces of paper, while the stock ticker marquees above all of them.
In reality, that scene only happens for a few hours on the trading floor; and because of all the technology and automation, most of the chaos now happens virtually, inside computer networks and on the internet – which means all the yelling and paper-throwing is almost a thing of the past.
“Almost” because it still happens in some places; but in most countries, including the Philippine Stock Exchange, it’s now drab and peaceful inside.
In any case, what actually happens inside the stock exchange doesn’t really matter. Because what’s important is that you understand how the stock market works, and why investing in it should be boring.
Boring Is Good
If you want excitement, go to the casino. But if you want a quiet and steady way to make money, then invest in the stock market (or in a UITF or mutual fund, for that matter).
We are conditioned to think that anything that’s “boring” is bad. However, when it comes to investing, the more boring it is, the better – because at the very least, that means you’re not losing money in the investment.
Think about it and I know you’ll agree.
Of course, there are “more exciting” strategies you can do in the stock market (i.e. trading stocks) and there are “more exciting” investments out there (i.e. currencies).
But both require higher risk appetites, and if you’re someone who can’t emotionally handle losing money, then cost average investing is your key to peace of mind.
Buy stocks and hold. Repeat regularly for many years, then sell and take profit. It’s a boring routine, but one that’ll give you enough wealth to live a fun and exciting life in the future.
This article is now part of the series: How To Invest In The Stock Market