When I started working, I knew very little about personal finance and managing my money.
There were all these acronyms and plans and options. It was a whirlwind.
But I enjoyed learning about it because it was a puzzle. How does a 401(k) fit with a Roth IRA? What is an asset allocation and what should I invest in? What is the difference between a fee-only financial advisor and the guy offering me a free lunch to pitch me life insurance?
Eventually, you learn the basics (much of which fits on an index card) and now it's a matter of “waiting.” I put waiting in quotes because you're not sitting idle, you're simply living your life while time works its magic to compound your returns.
This period of “waiting” is what's often called The Boring Middle.
The beginning is when you learn everything.
The end is when you get to enjoy the fruits of your labor.
That area in between – that's the Boring Middle.
The Myth of the Boring Middle
Read enough about financial independence (early retirement) and you'll see a few people write about this Boring Middle. It's a time when your motivation may be at its lowest. Everything is on autopilot and you're simply waiting for your paychecks to get deposited, invested, and your portfolio to log returns.
The middle is only boring if you let it be boring.
The middle is only boring if you are solely focused on finances.
The middle is only boring if you do nothing else.
Which is a huge mistake!
For decades, the image of traditional retirement looked like someone working for forty years and then finally retiring. With their retirement savings, they could finally enjoy their leisure years in style.
Think back to the last time you had an unexpected day off – what did you do? Did you finally enjoy your leisure day in style? Or did you do a few errands (laundry! it's always laundry!), pick up around the house, and catch up on TV shows?
Now imagine you have years to spend. What would you do?
If the answer is “I'm not sure,” then you're in trouble.
If you let the Boring Middle be boring, you're squandering the greatest opportunity of your life.
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How to Win the Boring Middle
The takeaway from the Boring Middle isn't that it's boring, it's that it's on autopilot. You don't have to spend more time tinkering and figuring things out, you've figured it out. You just need time.
Eventually, you portfolio's changes will have a greater impact on your net worth than your salary. That is a great thing, but tough to watch when the markets whipsaw (here are tips on how to handle volatile markets).
Your portfolio will generate dividends that will exceed your expenses. That is a great thing, you've escaped financial gravity.
This is when you should be focusing on other parts of your life!
You're winning the game of personal finance, even if the victory celebration won't be for a few years, so let's work on winning the game of life.
We all know stories of super wealthy, financially successful people who have miserable lives outside of their bank accounts. Whether it's bad relationships, poor health, or just simply boring people with no hobbies or interests… you don't want to be that way.
You have to view your life as a stool with as many legs as you have important parts of your life. Family, friends, health, hobbies, etc. You want those legs to be strong and, relatively, even.
The biggest benefit of this is that you'll have something to do when you've gotten through the Boring Middle and are firmly in your retirement years.
With all this time, you'll have hobbies you enjoy, people you enjoy spending them with, and the vitality to enjoy them to the fullest now that you have the finances to support it.
Don't squander the “Boring Middle” by watching your portfolio grow.
