The boring path to exciting returns

economictimes.indiatimes.com:

How to get good returns from your investments without working too hard for them? Let me start with a question: why does anyone invest? You may say, to get good returns on the capital. Well, of course. So, how should one invest to get good returns?This question may attract a lot of varied responses: invest in stocks, trade derivatives, invest in the top-performing asset class at the moment, and so on and so forth. What if I told you that getting good returns has nothing to do with any of these?If you have started to roll your eyes in disbelief, this quote from Late Paul Samuleson, a Nobel Prize laureate and an American economist, may be an eye-opener: “Investing should be more like watching paint dry or watching grass grow.

If you want excitement, take $800 and go to Las Vegas.” This witty statement sums up well all there is to investing. Why is it that then most investors fail to get good returns from their investments? From my experience of the last 15 years, I can say that people tend to overcomplicate investments. They are always on the lookout for exciting investments that can help them make a quick buck.

More often than not, this approach only results in wealth destruction. How? When you try to make a quick buck, you pay a lot of attention to what’s hot and sizzling at the moment. This invariably means flipping your investments every now and then to chase the ongoing trend.

But just like fashion, trends keep changing faster than you can keep pace with them and you never settle with your investments. Because of this, limited compounding takes place and the outcome is poor returns. No wonder that many investors don’t even get Nifty 50-like returns from their investments.