“Set and forget” investing isn’t sexy, but it works. In fact, lazy investing is so effective, a study from Fidelity found that the best performing investors had either forgotten about their accounts or even crazier—they were dead.
Fidelity reportedly conducted an internal study—a performance review of accounts between 2003 and 2013 to find which accounts did the best. I love the way Living Rich Cheaply explained it (emphasis ours):
They found that
the best performing accounts were from investors who were DEAD! In second place were investors who had FORGOTTEN they had accounts at Fidelity.
This was an internal study that made its rounds when asset manager James O’Shaughnessy relayed it on Bloomberg radio. However, it’s certainly not the first study to show that lazy portfolios work. Over time, slow and steady seem to win the race when it comes to investing. While active investors will tell you it’s possible to time the market and make a killing by playing stocks, the data seems to show otherwise, and set and forget investing is probably the easiest and safest bet for beginner investors anyway.
MarketWatch makes a valid point, though—this doesn’t mean you shouldn’t check up on your portfolio every now and then and rebalance as you get closer to retirement. However, it’s a good reminder to avoid buying high and selling low, which is easy to do when you see the market take a nosedive. In other words—check up on your portfolio every now and then, but for the most part, forgetting about your investments is the best thing you can do for them. For more detail, head to the links below.
Fidelity Reviewed Which Investors Did Best And What They Found Was Hilarious | Business Insider Via Living Rich Cheaply
Photo by Steven Depolo