11 Ways to Build Wealth as a Lazy Investor

Investing can be as hard or as easy as you want it to be. If you relish reading a dense annual report or digging into analyst reports, great. You can spend your free time researching, analyzing, and tinkering with your portfolio.

On the other hand, if your eyelids started feeling heavy when I mentioned analyst reports, you probably need a simpler approach. Here are 10 low-maintenance investing strategies that can help you build wealth with little effort.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Dollar-cost averaging (DCA) is the practice of investing smaller amounts at regular intervals. You might, for example, invest $300 monthly, in lieu of a single, annual investment of $3,600.

DCA has the advantage of reducing your timing risk. In a once-annual stock purchase, your cost basis is set by a single transaction. Bad timing on that buy could put it in a hole in short order. With monthly investments, your cost basis in that year is the average of 12 transactions -- which smooths out any one of them being an anomaly.

For the lazy investor, DCA is easy to automate. Assuming your brokerage supports it, you can set up automatic funding and investing in your account in a few minutes. From there, as long as you stay confident in your stock picks, your investing can run on autopilot.

ALSO READ: The Pros and Cons of Dollar-Cost Averaging

Buy and hold is a long-term investing approach. You pick stocks you're comfortable keeping indefinitely -- which is very different from investing in stocks you think will pop tomorrow or next week.

Good buy-and-hold prospects are mature companies that have been battle-tested by down markets and poor economies. They tend to have strong balance sheets, geographically diverse business lines, market-leading positions, and growing cash flows.

Buy and hold suits the lazy investor because it doesn't require lightning-quick responses to corporate news. You find companies you like and invest in them. You don't take profits; you let your stocks appreciate for as long as the businesses remain sound and strong.

Index funds mimic the performance of an underlying index like the S&P 500, Nasdaq Composite, or Russell 2000.

There is an index for nearly any segment or asset class you can think of -- from large caps to international corporate bonds. And where there's an index, there's usually an index fund.

You can use index funds to build a simple but diversified portfolio with as few as two positions. That will be far easier to manage than 20-plus stocks along with any debt positions. You'll have less research up front, and rebalancing will be a breeze.

And if you prefer a more complex set of exposures, index funds can support that, too. You can buy index funds that invest in gold, real estate, emerging markets, and so much more.

ALSO READ: 9 Index Funds for Long-Term Investors

A workplace 401(k) has a unique wealth-building resource: company matching contributions. If your company matches your 401(k) contributions at any level, take advantage of it.

A 3% match on a $55,000 salary equals $1,650 of free money each year. Save that amount for 20 years at 7% average annual growth, and you'll have about $68,000 -- not counting your annual raises.

Even without matching contributions, the 401(k) is well suited for the lazy investor. You set up your contributions and fund selections, and the investing happens automatically. Some plans allow for automatic annual contribution rate increases, too. That's about as easy as it gets.

High-quality stocks are known for their resilience in troubled economies. They require less oversight and less trading than their more volatile counterparts. These are also the stocks you'd choose as a buy-and-hold investor -- because you're confident in their long-term prospects.

The lazy way to find quality stocks is to look within quality factor exchange-traded funds (ETFs), funds, and indexes. Two low-cost ETFs are Vanguard U.S. Quality Factor ETF and iShares Edge MSCI USA Quality Factor ETF. You could also look at the top constituents of the S&P 500 Quality Index.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Factors that characterize a company as high quality overlap with factors that enable a company to pay dividends reliably. That's why stocks labeled as high quality are often solid dividend stocks, too.

Dividend payers have an extra advantage in down markets. The good ones will keep generating income, despite the investing climate. For that reason, dividend stocks are easier to hold through tough markets. When share prices are falling across the board, you're not likely to get that panicky urge to sell your dividend payers -- because they may be the positions you own that are producing for you.

Choose dividend stocks (or funds) with long histories of increasing shareholder payments. No dividend is guaranteed, but companies that have prioritized dividends for decades are likely to keep it up.

ALSO READ: Best Dividend Stocks to Buy and Hold in 2022

A single-fund portfolio could be the easiest, laziest option there is. You can invest in a target date fund or a balanced fund. Both hold a strategic mix of stocks and fixed-income assets -- so you don't have to diversify across asset classes on your own.

Target date funds are mainly geared for retirement savings. You pick the fund vintage that matches your planned retirement year. As you close in on that year, the fund gradually shifts to a more conservative asset mix over time.

Balanced funds, on the other hand, hold their asset mix stable. A balanced fund is a good fit when you don't expect your risk tolerance to change anytime soon.

Choosing low-fee funds is an easy way to enhance your long-term returns.

Funds have operating expenses, which they pass along to you, the shareholder. You don't see a line item for fund fees on your statements, but they are embedded in the fund's returns.

You can compare fund fees by looking at fund expense ratios. The expense ratio generally looks like a small number -- say, 0.1%. Still, fund fees can have a huge impact over time.

Say you have $50,000 to invest. You can put it in a fund with an expense ratio of 0.1%. After 30 years of 7% annual growth, you will have paid about $10,000 in fees. Choose a similar fund with an expense ratio of 0.03% and your fees will total just over $3,100 under the same assumptions. The lower expense ratio saves you more than $7,000.

Another option is to copy fund portfolios recommended by famous investors. As an example, you could mimic the master of buy-and-hold investing, Warren Buffett. He likes a two-fund portfolio, with an S&P 500 index fund (90%) and a short-term Treasuries fund (10%).

If you prefer something more conservative, you might like Ray Dalio's all-weather portfolio. Dalio is a student of economic trends, and he constructed the all-weather portfolio for resilience in down markets.

The all-weather asset mix is 40% long-term Treasuries, 30% large-cap stocks, 15% intermediate-term U.S. bonds, 7.5% gold, and 7.5% commodities. You can build it with five ETFs.

Note that because this is a bond-heavy portfolio, it will underperform when the stock market is rising.

ALSO READ: 4 Stocks Warren Buffett Has Owned for at Least 21 Years

An important part of building wealth is protecting what you earn. To do that, keep an eye on how your asset allocation evolves over time.

In rising markets, your stock positions will appreciate to constitute a growing percentage of your holdings. As your stock exposure rises, so does your potential for volatility.

For example, say you started with 90% stocks and 10% bonds. After a strong period for stocks, you see your portfolio has shifted to 92% stocks and 8% bonds. That might be a riskier allocation than you want.

You'd fix this by rebalancing your portfolio periodically. To rebalance, sell some of your stocks and use the proceeds to buy bonds. Your goal is to return the portfolio to your intended allocation.

One trick to making money as a lazy investor is to continue being lazy -- particularly in down markets. Often, the best strategy for managing through a down market involves doing nothing. You will avoid selling when share prices are bottoming out. You also keep your portfolio intact, which positions you well to benefit from an eventual recovery.

Don't let a bad market shake you from your lazy plan. If you've picked good companies, they should survive downturns. Stay invested, keep investing, and be ready to see good results once that recovery sets in.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Set up automatic investments in quality stocks or low-fee funds and let your investing run on autopilot. Check in every once in a while and make adjustments as needed. Let long-term stock market trends do the work for you.

Investing doesn't have to be harder than that.

There's a good chance, too, that you'll produce better results than many active traders. In other words, you'll do less to get more. What could be better?

Catherine Brock has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.