4 minimalist investing tips for 2021 and beyond

Can minimalist investing make someone a better wealthy? Perhaps not, but it will may certainly make someone time-rich. Paul Summers has a few suggestions.

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Buying and selling shares can be as engrossing an endeavour as we want to make it. Given all the other fun things we can do with our limited time on this planet, however, I find the idea of ‘minimalist investing’ very appealing. Accordingly, here are a few suggestions for making it feel less like a burden in 2021. 

Minimalist investing 101

Restricting oneself to a set number of holdings could be considered the best place to start.

Naturally, the actual number will vary from person to person. That said, we all have a limit over how much time we can devote to researching, buying and tracking our investments. My ISA portfolio, for example, never has more than 20 stocks in it. Any more than this and I’d feel overwhelmed. Moreover, too many stocks might dilute the impact of my big winners! 

For some people, even 20 separate companies will feel like too much. In this case, they may want to consider buying a small number of cheap, exchange-traded funds. These simply track an index like the FTSE 100, give instant diversification and require next to no ‘maintenance’.

Ditch the app

It’s been incredibly easy to spend more time than necessary staring into a screen recently. It’s for this reason that I’ve deleted all investing-related apps from my smartphone. The logic behind doing so is that I’m then less compelled to check my portfolio. As a result, both my homescreen and my brain are less cluttered.

Now, removing these apps might feel uncomfortable at first but persistence is the key to breaking any habit. It’s no different from keeping unhealthy food out of the home. By removing the ‘cue’ (the app icon), I minimise the likelihood of a ‘behaviour’ (habitual portfolio-checking) occurring. Setting daily time limits on apps is a less severe option.

Go automatic

One thing I’ve learned in many years of investing is that I can’t time the market consistently. As such, the vast majority of my buying now happens automatically on the same day every month via my broker’s regular investment scheme. This helps to remove emotion from the process. It also saves me money. Some online share-dealing platforms charge zero commission on monthly purchases! Over time, this could have a dramatic impact on my returns. 

Another minimalist investing idea is to automate savings. This involves instructing a bank to transfer a fixed amount over to a Stock and Shares ISA every month. In addition to removing the need to do it manually, scheduling this transfer to happen the day after being paid also ensures building a nest egg for the future is prioritised over frivolous spending. As the saying goes, “Pay yourself first”

Don’t ‘read all about it’

A final way to adopt a minimalist approach to investing is to reduce the amount of news we consume.

Clearly, this idea is easier said than done in the midst of a global pandemic. However, I think the important word here is ‘reduce’. Attempting to eliminate all news flow from one’s life is not only difficult but could cause anxiety. Being selective is key.

For me, this involves seeking news from only one or two reputable sources and treating everything else as noise. If this sounds too restrictive to you, consider saving your regular news binge for times when the market isn’t open.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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