7 Things To Do When Index Funds Get Boring

Index funds are boring.

There I said it. We’re all thinking it. But now it’s sitting right there out in the open. And that’s not necessarily a bad thing. In fact, it’s kind of the beauty of index funds in my eyes.

Because remember, investing passively via index funds according to your asset allocation that you re-balance yearly is the right way to invest. It beats active investing via stock picking of timing the market 80% of the time. Index funds also have lower fees and taxes. Plus, it takes a lot less time. I spend about 5 minutes yearly re-balancing my investments.

That’s a win-win-win.

But, index funds are boring. And that can present a sliver of a problem

Because we are tinkerers. All of us to some extent. Of course, some more than others. But I’d wager that doctors tend to be bigger tinkerers than the average person. Because that’s what we do as doctors. We tinker with things (disease processes) to make them (our patients) better.

But, with investing, as opposed to most of medicine, we do better when we do less. And that feels strange to us.

So, we tinker with our investments. We start to believe that we or our advisors actually can beat the market.

And that’s when the trouble arises.

So, if you are getting tired of boring old index funds and starting to think about tinkering, here are 7 things you can do instead…

7 things to do when index funds get boring

Here we go!

1. Read a book about investing

But it’s gotta be the right book.

This is something I’ve actually done. The more I learn about investing in the stock market, the more convinced that passive investing is the way to go. And I don’t mean to suggest that you just read something in your “echo chamber” that will keep reinforcing already held ideals.

I try to read books by others whom are respected and experienced and looking to educate rather than sell.

Some of these books have even pushed against some features of passive investing and advocated for some active investing. However, this education still led me to the conclusion that passive investing with boring old index funds is best for me and 99.9% of investors. (I’ll hit on the other 0.1% in a bit.)

Some of my favorites that I recommend are:

• A Random Walk Down Wall Street by Burton Malkiel
• We’re Talking Millions!: 12 Simple Ways to Supercharge Your Retirement by Paul Merriman
• The Bogleheads’ Guide to Investing by Mel Lindauer et al.

2. Review your financial plan

And obviously, if you don’t have a financial plan yet, you need to create one. Really, you do. You can even look at my actual financial plan here and use it as a template.

Once you have one or if you already did, spend some time reviewing it. And make sure to do so with your significant other if you have one. It’s important to be on the same page.

The reason I suggest doing this is because your financial plan is your guide or treasure map to financial freedom. Whenever I get a bit antsy and feel the desire to do some tinkering, I just look back at my financial plan. It reminds and shows me that I don’t need to tinker to reach my goals.

In fact, if I just stay on autopilot and keep following the plan we created, I know that I will reach financial freedom.

That gives me the peace of mind and resolve to keep going with the core of my plan: investing in index funds…

3. Invest in something where tinkering actually helps

One of the things I really like about real estate investing is that tinkering actually helps. The more “active” you are, the better investor you generally are.

And I put active in quotes up there because your activeness (it’s a word) can be anywhere along a spectrum. You can be an active direct investor like me and Selenid or you can be a passive investor through a real estate group like mine with Daniel Shin, Cereus Real Estate.

But either way, you need to have some element of an active role. If you are a direct investor, the better you become at identifying and analyzing potential properties, the better deals you find. The more you identify and unlock hidden value in your properties, the better they do. The more efficiently you run them, the better cash on cash return for your investment.

And if you invest passively via a syndication or fund, you still need to actively learn about the investments and the deal sponsors to be successful.

This can be a great outlet for your need to tinker while you leave your boring index funds alone!

4. Take up a side gig

If you have time to sit around and worry about analyzing a stock’s beta, you probably have some extra time to do something that will actually have a much greater financial yield.

As a doctor, you have expertise that very highly sought after. So much so that people are willing to pay you handsomely for it.

You just need to know the right places to look and spend a little time finding the right side gig to fit you. But opportunities abound including:

• Medical surveys
• Consulting
• Real estate investing
• Expert witness

…as well as chart review, writing, coaching, and more like these!

This is a much more productive and well-paid use for your time.

5. Adopt a satellite investing strategy

Ok, this is for the 0.1% of investors who just really need to tinker and cannot accept a portfolio of boring index funds despite them just being the better way to go.

In your case, consider a satellite investing strategy. A satellite investing strategy is one where the core of your investments are in passive broadly diversified, low cost index funds. But you also have “satellites” of actively managed accounts or individual stocks floating around that core.

It may seem strange that I am talking about this because I am such a big fan of passive investing strategies. And all of my stock portfolio is in passively managed index funds.

Even more, most of these potential satellite investments are included in my 3 most tempting investments to avoid.

But, if someone is going to invest in these types of things, it is much better to do so via a satellite investing plan than some other plan where they comprise a majority of the portfolio.

Because, if you read the research and the blogs and your head knows that a passive investing strategy is the way to go

But your heart or gut still tells you to invest in individual stocks or NFTs. Then a satellite investing plan is a great place to start.

Do it for a bit, see how your satellites perform. And one of a few things will happen:

1. Your satellites will underperform and you’ll get tired of them and eliminate them from your investment plan,
2. Your satellites will have a huge jump in value and then fall thanks to volatility, so you’ll get tired of it and eliminate them, or
3. They will have a huge jump in value and you’ll get lucky, sell at the peak and make out with some profit

All of these situations are a win as long as you don’t get lucky and think you will keep getting lucky.

So, recognize luck for luck and you will be ok.

6. Make paying off debt into a game

It’s not really tinkering, but paying off debt can become a fun kind of game that satisfies a lot of (at least my) desire to fiddle in finances.

Plus, paying off debt is pretty much always a great investment. Plus the return is always guaranteed. Not even index funds can boast that.

So, if you have debt – student debt, credit card debt, car debt, mortgage – make a game of paying it off. Even if you just have a mortgage, maybe pay a bit more off extra each month.

I know it’s controversial, but I even am a believer in prioritizing some debt above investing…

7. Enjoy your life!

Remember that the whole point of financial well-being and financial freedom is so that you can enjoy all the other awesome things in your life. Things like family, friends, and even your work as a doctor.

It can be easy (and I am super guilty of this) to get lost and start thinking of financial freedom as the goal in and of itself. Then you can get caught up in obsessing about it and trying to dive into every nook and cranny of it.

But you don’t need to!

Revisit your “big why” and remember that your financial plan is designed to get you to the finish line. So as long as your are following it, you can ignore everything else and just…enjoy life!

And if you find yourself struggling to create that financial plan or establish your “set it and forget it” path to financial freedom, try checking out my best-selling book, Money Matters in Medicine!

What do you think? Are index funds boring? Do you ever get the urge to tinker? How do you deal with it? Let me know in the comments below!