Sloth is often a function of time. It may be that you don’t have the hours or don’t want to put in the hours necessary to be a good investor. That’s fine. Though there is a minimum amount of work every investor needs to do, you must find the right investing mode given the hours you are willing to expend. Your sloth may result from being in the wrong mode; you’re trying to do it yourself when you really should be relying on a money manager. The three modes, therefore, are:

  1. Doing it yourself
  2. Focusing on mutual funds
  3. Using a money manager

If you do it yourself, you need to make the time commitment to do it right. This doesn’t have to be a huge commitment, but an hour or two weekly is probably the least you can get away with. If you’re not spending that time, you’re being slothful, and you will pay for your inattention to your investments. If you lack the time or the interest to do it yourself, and have only chosen this mode because you want to save money on commissions and management fees, then you should consider switching to one of the other two modes where the time requirements are less.

FundsMutual funds require less time, but you still need to do your homework to pick the right fund for you, taking into consideration their track records as well as the fees they charge. You also need to monitor their performance and be prepared to switch if necessary.

Using a money manager is the least time-intensive alternative, but as I noted earlier, you can’t simply turn everything over to a broker or advisor and assume he will manage your investments like they were his own. You still must monitor what he does and how well he performs versus other money managers to get a sense of his value. Even if you find the perfect money manager and have absolute faith in his abilities, you must spend one or two hours every quarter reviewing what has been done.

Of course, some people don’t choose just one of these investing modes but use them in different combinations. For instance, you might use a money manager for some investments but invest on your own for others. Whatever your particular choice is, determine if you’re putting in the hours necessary to avoid sloth. To make this determination, answer the following questions:

  1. Do you spend no more than an hour or two per month (and often less) monitoring your investments?
  2. When you do find time to look at your statements, do you find yours distracted and not really concentrating on what you’re rea mg?
  3. Do you find yourself thinking that you should evaluate how your assets are allocated and do other investment tasks but other things to distract you and you never get around to it?
  4. Does it seem as if you have a short attention span when it comes to your investments; are you unable to spend more than a few minutes doing your investing homework before your mind starts drifting?
  5. Do you start analyzing your investments or your advisor then stop as you rationalize that you don’t know what you’re doing and you’re just wasting time?

Answering yes to at least some of these questions suggests that you need to refocus your time when it comes to investing. As you’ll discover, just making a commitment to do so isn’t enough. What you really need is a routine.

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Time and Sloth: Putting in the Hours Appropriate for Your Investing Mode