Lazy Investing 101: Earning More by Doing Less

The lazy investor wishes to earn a decent return without taking on too much risk or hassle. He wants to allocate his capital to assets with a low risk of failure or loss.

Our lazy investor is not stupid. He has reached this conclusion through diligent observation and study. He has observed his fellow enterprising investors and is a bit cautious of their approach. The enterprising investor is quite active and seeks out the highest return possible. For this reason, the enterprising investor allocates most of his capital to higher-risk assets.

The enterprising investor can stomach some losses and has a lot of confidence in their craft. However, only a small proportion of enterprising investors can beat the returns achieved by our lazy, passive investors. The lazy investor allocates most of his capital to low-risk assets like bonds, unit trusts, and index funds. He invests some money into his portfolio every month for decades and allows the compounding effect to lift his portfolio to great heights.

Our passive investor has found a way to automate and reinvest his interest and dividends. Everything is on autopilot, which leaves him with time to focus on his career and family.

The enterprising investor toils and hustles every day and occasionally makes a huge return. But this approach doesn't work for the majority of people, who would be better off adopting the lazy approach to investing.