Reading candlestick charts, keeping an eye on the stock prices five days a week, staying updated on the market movements and news around the world, taking quick decisions in case of sudden volatility – investing sure seems like a lot of work, doesn’t it? According to a survey by Money9 between May and September 2022, only 3% Indian families actually invest in equity.

Imagine having to spend all that time scanning the market news for investment opportunities when you could be bingeing on your favourite shows! But being a couch potato and staying glued to the TV screen won’t help you achieve your financial goals either. It’s a catch-22 situation.

But what if you could be a couch potato and achieve your financial goals too? What if there was a way to make your money work for you without having to do a lot of work yourself?

Couch Potato Investing: Lazy Portfolio

Believe it or not, there actually is such a thing such as couch potato investing. This is a strategy of passive investing that basically puts your investments on autopilot. No need to constantly monitor or rebalance your funds actively! Interestingly, a portfolio built using such a strategy is called a “lazy portfolio”.

A lazy portfolio is essentially made up of two asset classes: equity and debt. The equity portion aims at wealth creation, while the debt portion of your portfolio generates stable returns in the short term thereby reducing equity volatility. However, equity investments in general require more attention and caution, and are not inherently passive in nature. But there is a solution to this as well.

A lazy portfolio invests in diversified index funds or exchange-traded funds (ETFs). These instruments simply replicate established and trusted indices, and also automatically offer diversification across market caps and sectors. At the same time, the investor knows exactly in which stocks his funds have been allocated and can easily keep an eye on them, simply by studying the underlying index.

Benefits of Couch-Potato Investing

Since it is a passive investment strategy, couch-potato investing is both less time-consuming as well as low cost. As mentioned above, index funds and ETFs simply replicate indices, and thus need no active management or constant monitoring. This, in turn, reduces the transaction costs and other expenses. Furthermore, indices are generally not overly volatile (unlike individual stock prices) and tend to level out over the long-term, giving your investments an opportunity to benefit from market returns over the long term.

This investment strategy is more suitable for investors with a long-term investment horizon. Those who prefer investing their savings once in a while and then let the markets handle the rest can opt for such a strategy.

How to Build Your Lazy Portfolio

The most important stage in couch-potato investing is the first stage when you make your initial investment. It is upon this investment that the rest of your portfolio will build up. Thus, it is important to choose the index fund or ETF carefully right at the beginning.

To do this it is first necessary to chalk out your financial needs and goals, as well as make an honest appraisal of your risk appetite. You can then choose the funds which are best suited to fulfil your needs and goals. Since index funds already offer diversity by tracking broader market indices, it makes your job easier.

Also Read: Know How to Choose a Suitable Mutual Fund in India

A popular way of building a lazy portfolio is the 60:40 formula which invests 60% of your investible money in equity funds and 40% in debt funds. The slightly bigger equity portion allows for more scope for wealth creation. However, depending on factors such as your goals, risk tolerance, age and investment horizon, you can tweak this formula to suit your needs.

While it does not need regular monitoring and active management, it is advisable to rebalance your lazy portfolio at least once a year to make sure it is in line with your goals. For the rest of the year, let the markets guide your portfolio on autopilot.

Put Your Money To Work

The India growth story is on the rise and the time is ripe to make the best of the opportunity. Couch-potato investing is a simple way to make sure your money doesn’t sit idle but keeps growing without compromising on the time for activities that require more of your attention. Even being a couch-potato has its perks, right?

References:

https://www.investopedia.com/ask/answers/08/couch-potato-portfolio.asp
https://smartasset.com/financial-advisor/couch-potato-investing#:~:text=What%20Is%20Couch%20Potato%20Investing,a%20mutual%20fund%20or%20ETF.
https://finance.yahoo.com/news/money-nothing-build-couch-potato-140046098.html

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.