Whether maintained for purposes of decor, numerous health benefits, or for food, many people know and understand how to take care of house plants.
And yet, despite being entirely capable of maintaining and caring for another living thing, many people feel unprepared or unable to begin investing and maintaining a portfolio.
How are Houseplants and Investing similar?
Unbeknownst to many, houseplants and maintaining a portfolio have a lot in common. Maintaining houseplants and investing both require routine attention, although the amount of attention varies by what kind of plants, or investments, you make. In the same way that some plants require daily, or near-daily attention, some styles of investing involve spending time every day trying to make profits from the daily ups and downs of individual stocks. Other investors choose a more hands-off investing style that requires much less attention, like a plant that needs only occasional watering. There are, of course, many other plants and investing strategies that fit between these two extremes.
The Houseplant Investing Strategies:
The Home GardenerHome gardeners have a lot of plants, and they expect to get a lot of value from each one. These are people who change plants with the seasons and are always trying to maximize yields, either in produce or flowers. Much like their gardening counterparts, these investors are short-term in nature and are aiming for consistent results.
Home Gardeners have a diversified portfolio that is well-organized and managed carefully. They pay close attention to headlines and trading cycles in order to know when and where to shift resources.
Be careful when exploring this method. A portfolio set up to be actively manged can, like an untended garden plot, turn ugly in a hurry. If you plan to be a very-active investor, make sure you have the time to dedicate to your portfolio.
The Ficus TreeThe Ficus tree requires less attention on a day-to-day basis, but still requires some attention. Growing a tree indoors requires regular watering to keep things growing, but plants also need to be rotated so each side gets a turn in the sun. Pruning can help things stay even and keep diseases at bay.
Investors in this style will keep track of market sentiment and news to ensure they aren’t letting gets go untended for too long. Ficus Tree investors care a lot about where they place their investments, as they want to pick the parts of the market where the sun is shining. These investors will seek stable investments that grow steadily over the years, while also regularly checking their portfolio to weed out under-performers and perhaps even trim positions that have grown too large.
Don’t forget your roots with this style. Paying too much attention day-by-day with this method can cause your portfolio to rot. Being too quick to give up on an investment can lead to unnecessary losses. Keep track of why you purchased the security in the first place; because you think it is a good buy for long-haul, not because it is or isn’t climbing upward today. Conversely when not routinely watered, the portfolio will start to wilt as investments start to go bad.
The Potted CactusThe potted cactus requires hardly any maintenance. They don't grow very fast, but cacti can live for decades.
As an investing style, these investors just want to check in occasionally, but don't want to have to do a lot of work. This strategy doesn't work with just any investment, just like it won't work with any plant. These investors should take advantage of investments that don't require a lot of careful tending, such as Exchange Traded Funds (ETFs) that track broad indices, or mutual funds.
Potted Cacti investors must still pay attention to their investments, however in a much less involved way. In terms of ETFs and mutual funds, these investors buy in with thousands of other individuals to either have the invisible hand of the market, or a professional manager keep their investments on track. This can help investors be well-diversified without having a lot of capital or time involved in the process.
While hands-off, this is still not a mindless choice and the amount of care paid within this category varies greatly. ETF investors can take advantage of stock-like liquidity and trade more frequently than individuals investing in mutual funds, which often carry penalties if a position isn't held for a minimum amount of time.