The "Boring Middle" of Investing
The other day, I was listening to an episode of the Dividend Talk podcast where they talked about something called the "boring middle" of investing. I had never heard of the phrase before, but the concept was familiar.
In a nutshell, the "boring middle" is the point at which the honeymoon phase is dwindling down and the novelty of what you’re doing wears off. This doesn’t just happen in investing; it can occur in anything you do.
You know how it goes: You start something new, and at first, it's super exciting—maybe even a bit obsessive. But after a while, whatever that thing is starts to lose its luster, and you find yourself in this "boring middle" where things begin to feel more routine, and possibly a bit monotonous.
I think every investor reaches this “boring middle” in their investing journey (probably more than once) and this is how it happens:
As you embark on the long journey to financial freedom, everything is new, you're learning a ton, and it’s all exciting. At this point, you get your first taste of passive income as those initial dividend payments come in, and you feel great about the fact that you’re doing something positive for your financial future.
But after a while, maybe a couple of years in, that initial excitement wears off. Nothing feels new anymore, you're used to getting dividends on a regular basis, and the progress in your portfolio might seem slower (or, at least, not as tantalizing as it once was).
Investing has gone from being this thing you can’t stop thinking about, to now just being a thing that you do.
So, how do you overcome the “boring middle” of investing, and to steal a phrase from the Doors, break on through to the other side? Here are some ideas:
Acknowledge you’re there. As the saying goes, knowing is half the battle, and this is a normal phase. If you do anything long enough, it’s bound to feel stale at some point.
Switch up your routine. If certain aspects of your investing routine have become monotonous, don't be afraid to take a break from those things. Explore other avenues to stay engaged, like reading books on your favorite companies instead of research reports.
Revisit your long-term goals. It helps to remind yourself why you started this journey in the first place. Whether it's achieving financial freedom or building wealth for a specific purpose, keeping the finish line in mind can rekindle your motivation.
Avoid impulsive actions. When things start to feel monotonous, the temptation arises to make drastic changes to your portfolio out of sheer boredom. You want to actively fight against that. Instead, stick to your investment strategy, and once again, keep the finish line in mind.
Embrace the boredom. Remember that periods of boredom are a natural part of the investing process. In fact, investing should be boring! As Charlie Munger said, "The big money is not in the buying and selling, but in the waiting."
Have you ever experienced the "boring middle" of investing? If so, how did you overcome it? Write to me here and let me know.
And a big thank you to the 22 readers who responded to last week's newsletter! You can read some of the responses down below in the "Hot Takes" section. 👇
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IN MY PORTFOLIO 📈
ICYMI 🎥
All My Dividend Income In January | $62,600 PORTFOLIO 💰
I only received 6 dividend payments in January, but each one definitely packed a punch, and they came from some of the highest yielding stocks in my portfolio like Altria Group (MO) and Blue Owl Capital Corporation (OBDC).
In this video, we’ll go through each of those payments so you can see all of my dividend income received for the month, which was a fantastic way to kick off the new year!
CAREFULLY CURATED 🔍
📺 Living Off Dividends (1 Year Later) - Every dividend investor day dreams about what it's like to actually live off of dividends. It's something we're all working toward, but few of us have actually reached that point for ourselves. Thankfully, we can live vicariously through people like Jake from the Dividend Growth Investing channel, who shares his firsthand experience of living off dividends this past year.
🎧 Charlie Munger's Last Podcast - As far as I know, Charlie Munger only did two podcast interviews in his entire lifetime. If that's correct, then this was his second and final, recorded just a couple of weeks before his passing last month.
📚 Morningstar's Top Dividend Stock Pick - According to Morningstar, this cheap dividend stock is nearly 40% undervalued and is coming in hot with a near 6% dividend yield. I've actually never considered this company before, but it seems interesting based on the article.
SINCE YOU ASKED 💬
"What's better (more profitable) to own: a dividend ETF like SCHD or a portfolio of dividend stocks that one can create on his/her own?"
- Mark | Email Submission
As far as which is more profitable, it really depends on a variety of factors. Generally, though, you can't go wrong by simply putting your money into the S&P 500 through something like VOO. It's the benchmark against which most investors measure their success (and typically fall short).
SCHD is a great option too. I personally invest in both every week.
Having said that, many of us, including myself, enjoy doing the research and the process of learning about different businesses. Many consider it a hobby, and find it fun to build a portfolio of companies you've hand-selected based on your own due-diligence.
However, there are pros and cons to this approach. The further you stray from the simplicity of investing in the S&P 500, the more your returns may vary – either positively or negatively. That can be a good or a bad thing depending on the direction of those variations. Plus, researching individual stocks requires more time and effort compared to the more passive route of investing in ETFs.
Overall, you just have to decide how hands-on you want to be, and that's something that may change over time. It often does for many investors.
Have a question? Ask me here to see it featured in an upcoming newsletter.
HOT TAKES 🔥
Last week, I asked readers which stocks they have their eye on for the month of February. Here are some of the responses:
Harald said: I think we are getting close to finding a bottom in Pfizer (PFE). They are struggling at the moment, but they have been taking steps through strategic acquisitions, business development partnerships and new FDA drug approvals to start growing again post COVID. It may take some years, but you are getting paid an almost 6% well funded dividend while you wait.
Josh said: The next stock I’ll be purchasing is Visa (V) and I’m also seriously considering Nike (NKE) and Hershey (HSY). I think Hershey could continue to see a decline in price. Earnings are in two weeks, and with the price of the cocoa bean climbing by the day, I think the earnings will reflect that.
Mark said: I added LVMH to the portfolio. Double-digit dividend CAGR, solid financials, and a wide moat. Technical trading around 200 EMA on weekly and some room to go somewhat lower where I will add to the position. Long time quality compounder I think.
Fil said: There are two stocks I've been adding consistently...Pepsi (PEP) and Nike (NKE). Although the market has been hot, these two haven't at all. In Pepsi's case, I am building a position by adding $25 on a bi-weekly basis. Meanwhile, with Nike, it's more lowering my average cost as it now looks like it may head under $100/share.
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