Lazy Woman's Method of Investing: From Money-Market Accounts and Beyond

I want money, but I don't want to work hard for it. Right now I have friends who, upon reading this, are rolling around holding their bellies they are laughing so hard, because as a horsewoman, I do a LOT of physical hard work. Someone has to tote 50-pound sacks of feed, bales of hay and clean stalls around the stable. And when I can't talk my husband into doing it, that someone is me. What I mean is I want my money to be safe and earn more money for me, but I don't want to spend a lot of time trying to manage it.

I am also averse to risk. You can picture the above mentioned friends laughing even harder than before. Training horses is risky. The most careful planning and the best willed horse in the world does not mean there won't be wrecks. One of my worst in recent years involved my well-trained, well-mannered personal horse, Monty. I rode him off an established path despite his attempt to tell me it wasn't safe to do so. He stuck his foot in a large crack and fell. I went off over his head and landed heavily on my left side. When I finally was able to move I looked over at him and thought he was badly injured. Thankfully he didn't have a broke neck, back or leg. I sported bruises for nearly six weeks and he was gimpy as well. So, while I'm adverse to risk I accept it is out there and sometimes I even ignore clear attempts to keep me from making mistakes. Just keep in mind there is no risk-free life in this world.

Some hire people to manage their money and invest it for them. The problem with this is that in my first experience with such a deal was I lost money. The person who purported to be an expert wasn't very good at his job and, while he got his fees, I lost a chunk of change. Since then I've done my own research and investing. Sometimes I lose money, sometimes I make money and sometimes I break even.

I have a technique I've developed in recent years that is fairly easy and protects me from horrendous losses. I set up an account with a brokerage company that allows me to keep funds in a money market account that earns a good rate of interest. It pays better interest than an ordinary money market account because it is not insured by FDIC. This means extra risk. Extra risk means better return. I set up my accounts so that once each month a certain amount of that money is invested in various places. I used to pick individual stocks to buy, but in the past few years a vehicle has come available that I like much better. It is now possible to buy shares based on Indexes such as Standard and Poor's Five Hundred, The Dow Jones and NASDAQ as well as other Indexes.

The S & P Five Hundred was the first one I was aware of. It was called a Spyder, a bit of a pun on the letters SPY that identified it, and I could buy it a share at a time. Other Indexes have followed suit and I developed the following program for myself.

I put a lump sum in that unsecured money market account with an online brokerage company and instructed that each month a sum was to be used to buy shares for me. Currently I am investing in the S & P Five Hundred, NASDAQ, and Dow Jones Industrial. The sum invested each month is small, but over time that adds up, especially since I reinvest my dividends.

In addition to investing regular sums at regular monthly intervals I also do another thing. When the market is high and people seem to be in a buying frenzy I sell my shares and put the money back into the money market account. At that time I look at the vehicles I'm investing in and if one is loosing me money or even just not making money I drop it. I may or may not replace it immediately with another vehicle.

To keep this from turning into work I only do this once a year. The selling of the shares will cost me money so I don't want to do it very often. There have been some years I haven't sold out at all because of the way the market was behaving. One thing I keep doing is investing those amounts on a monthly basis.

I like to use the third Tuesday as my buy day because, over time, I've noticed that, more often than not, if there is a lull or drop in the market it will occur at about this time. It doesn't always happen, but it occurs often enough to make this a good time to buy. One other regular occurring cycle seems to be that in any given year August is going to be a month the markets are at their annual low. Again this isn't an absolute, but it happens often enough to pay attention too. There may be similar patterns during other months, but I'm too lazy to hunt them down. If you do please let me know what you find.

In the past cycle my four chosen vehicles performed as follows: The best one gained 300% over the year. The second best gained just over100%. The third gained a modest 14% and the fourth lost a bit more than 1%. All in all it was a very successful year in my estimate. I dropped the loser and added the amount I'd had going into it to the three remaining vehicles. Most years aren't quite as spectacular as this one, but by investing in this way my original nest egg increased in a satisfactory manner without a lot of effort on my part.

Besides investing in Market Index Shares The Lazy Woman's Method of Investing should work well with the Dogs of the Dow, these are stocks that are at the very bottom of the Dow. The old saw about "hitting bottom before starting up" applies to them. Of course, occasionally some of them drop completely off the charts, but that isn't the usually case and investing in them once a year, selling a year later, and reinvesting in the current Dogs, can be profitable.

Selling when everyone seems to be buying will protect your core money. Continuing to invest fixed amounts on a regular basis will keep you from putting too much money into a balloon market and buy you more shares when the market is in the basement.

One final touch is to set an amount to keep in the money market account and, when the sum goes over that amount, withdraw the overage and put it in a FDIC account. Your money will be further protected from loss yet still making money for you.

This isn't a totally risk free way of investing, but then, as I pointed out in the beginning, nothing is absolutely risk free. Doing a little bit of research, such as listening to the news a couple of times a week, The Lazy Woman's Method of Investing can keep your money working for you with relatively low risk.