The past couple of months have been a rollercoaster ride for many investors. After the panic following the coronavirus pandemic wiped out millions for many investors, the stock market has been slowly recovering since.

However, it still remains turbulent and prone to downward swings, which investors should learn to navigate. If you currently have some money tied up in stocks or are planning to start investing at this time, here’s why you should choose a boring strategy.

‘Boring’ Investments to Consider

One such boring yet safer investment is an investment fund. With 10,000 of them to choose from though, it can be difficult to pick the best ones that’ll suit your needs and the amount of risk you can take on.

Here are some criteria you can use to determine which funds would work best for you.

The first thing you need to look into is a fund’s underlying index. It will show you what assets, like bonds and stocks, the fund is holding. Next, find out what the expense ratio that a fund’s managers will charge their investors annually to manage assets.

Of course, it’s also important that you research about a fund’s performance history to see whether it can bounce back fine after economic downturns.

Managing Risk

Once you’ve come up with a list of funds that meet the above criteria, you might want to stick to them instead of exploring other investment options. Although there are many out there that offer significantly higher returns, be reminded that they would come at a much higher risk.

‘Exciting’ investments like leveraged funds, futures, and options are typically used by experienced traders to earn more profits in a volatile market. If you’re relatively new to the stock market, following their lead would be too risky and might cause you to lose more than you can afford.

More Universal

Sticking to low-cost and low-risk mutual funds may be boring but it’s a strategy that’s proven to be beneficial for most people. In fact, even renowned investor Warren Buffett would prefer a similar strategy if he were to invest his wife’s inheritance.

The Berkshire Hathaway CEO shared that he put 10% of it in a government bond fund and the remaining majority in a stock index fund with low fees. The stock index fund would give him ownership of a wide variety of stocks in just one purchase making the management of the portfolio simpler.