It is natural to want the “perfect” investment—one that guarantees high returns with zero risk. But seeking flawless opportunities often leads to missed chances and stagnation. In investing, done is better than perfect. This article explores why chasing perfection backfires, shows how simple strategies outperform complicated ones, and offers practical steps to embrace “good enough” investing today.
The Perfection Trap: Why “Ideal” Investments Are Elusive
No investment is risk-free, and no strategy guarantees sky-high returns year after year. When you hold out for a mythical “best” stock or fund, you likely spend more time researching than actually growing your money. Markets are unpredictable, and new risks emerge constantly—from economic downturns to geopolitical events and shifting consumer trends. Waiting for perfect information means markets move on without you.
Psychologists call this the “fear of missing out paradox.” You postpone investing to avoid mistakes, but by doing nothing you miss out on compounding growth. Nobel laureate Richard Thaler described a similar bias: people prefer a small gain for sure over a higher expected gain with uncertainty—despite the latter often yielding better results long term.
Simple Strategies That Beat Perfection
1. Broad Market Index Funds
Instead of hand-picking individual stocks, invest in an index fund that tracks the entire market, like the S&P 500. These funds own hundreds of companies across sectors. Over the past several decades, the S&P 500 has delivered average annual returns around 10% before inflation. While individual stocks boom or bust, broad index funds capture overall economic growth with far less effort and risk.
2. Target-Date Funds
Target-date funds automatically adjust their asset allocation based on your intended retirement year. Younger investors get more stocks for growth; older investors shift toward bonds for stability. You don’t need to rebalance manually or second-guess market conditions. The fund’s built-in strategy does it for you, making a reasonable, age-appropriate plan “good enough” to build wealth reliably.
3. Consistent Dollar-Cost Averaging
Dollar-cost averaging—investing a fixed amount at regular intervals—removes timing fears. You buy more shares when prices are low and fewer when they are high, smoothing out volatility over time. This simple habit outperforms trying to pick market tops and bottoms, which even professionals find nearly impossible.
4. Automated Rebalancing
Maintaining your target allocation prevents stocks or bonds from drifting too far from your risk tolerance. Many robo-advisors and target-date funds rebalance portfolios automatically. You avoid the temptation to chase hot sectors or sell after market drops because the system does the work for you.
The Cost of Waiting
Every day you delay investing, your money misses out on potential growth. Consider a hypothetical scenario: You have $10,000 to invest. If you wait one year for the “perfect” investment while the market returns 10%, you lose $1,000 of growth. Over a decade, missing even a few growth years compounds into significant losses.
A study of 1,000 investors found that those who remained fully invested in a broad market index fund over a 20-year span far outperformed counterparts who tried timing the market. The “timers” missed critical rebound days and lagged by an average of 2.5% per year—a gap that cost tens of thousands in compounded gains.
Recognizing Perfectly Imperfect Choices
Accepting Trade-Offs
Every investment involves trade-offs between risk and reward. A bond fund may offer steady income but lower long-term returns. A tech-heavy fund may promise high growth but with sharp swings. “Good enough” investors choose broad, diversified funds that match their risk profile and goals, understanding no choice eliminates risk entirely.
Focusing on Process Over Picks
Rather than obsessing over hot sectors or individual stocks, prioritize consistent processes: monthly contributions, automated rebalancing, low-fee investments. A stable, repeatable system trumps the occasional winner in your stock picks.
Embracing Incremental Progress
You do not need to achieve perfect asset allocation on day one. Start with a 60% stock/40% bond split or a simple total market fund. Over time, you can refine by adding international or small-cap exposure, but initial simplicity beats hesitation indefinitely.
Practical Steps to “Good Enough” Investing
- Open a Low-Cost Account
Use brokerages with zero commissions and no minimums (e.g., Fidelity, Vanguard, Schwab). - Pick a Broad Index Fund
Choose a total market or S&P 500 ETF with an expense ratio under 0.1%. - Automate Your Contributions
Set up $25, $50, or $100 monthly investments. Automation enforces discipline and removes emotion. - Set a Rebalancing Schedule
Annually or semi-annually, rebalance to your target allocation. Use robo-advisors or automatic features if available. - Ignore Daily Market Chatter
Check performance quarterly or less. Avoid headlines and social media noise, which fuel doubt and chase. - Adjust Gradually
As you learn, add a small international fund or bond ladder, but only after mastering the basics. - Celebrate Consistency
Recognize each automated deposit as a victory for your long-term plan, not a gamble on perfection.
Common Objections and Reassurances
But won’t I miss out on big winners?
Individual stocks can boom, but they can also crash. Diversified index funds capture market-wide growth. If you do want high-conviction picks later, keep them as a small portion (5–10%) while the rest remains broad.
What if I want ethical or impact investing?
Good enough approaches exist for ESG or green funds that track responsible indexes. They offer diversification within a chosen theme without needing to vet individual companies endlessly.
Isn’t active management better?
Data shows most active managers underperform their benchmarks after fees. Only a few skilled funds consistently beat the market, and picking them requires as much research and luck as picking individual stocks.
The Psychology Behind Action
Taking imperfect action builds confidence. Each small step reduces fear, proves your plan works, and creates momentum. Over time your anxiety about investing fades, replaced by satisfaction from watching consistent contributions grow.
Beyond Good Enough: When to Refine
Once you master the basics and build a good-habit framework, you can refine your approach:
- Add a small allocation to bonds, real estate, or international funds.
- Introduce dividend ETFs for income if desired.
- Explore tax-advantaged accounts like IRAs.
- Learn about tax-loss harvesting and other advanced strategies.
These enhancements are worthwhile only after you have a solid foundation in place and have beaten analysis paralysis.
Done Is Better Than Perfect
In the quest to build wealth, perfect is the enemy of good. Waiting for the ideal investment or strategy locks you out of the market’s growth and leaves your money idle. Instead, embrace simple, proven approaches that require minimal maintenance, low fees, and consistent contributions. Good enough isn’t a cop-out—it is a path to real progress.
Remember, every successful portfolio starts with a first purchase. The sooner you begin, the sooner you benefit from compound growth. So pick a broad fund, automate your investments, and let your future self reap the rewards of your action today. Good enough is more than enough to build the wealth you need for tomorrow.
