OK I am certainly mixing my metaphors. Or I am mixing famous quotes with my favourite brand positioning. The Nike philosophy is Just Do It. They built a business around their marketing and their mindset. Get off your butt and get started. The same goes with investing. Just start investing. Continue investing. Don’t worry about building the perfect portfolio.
You don’t have to be the perfect investor trying to build the perfect portfolio. It’s more than OK to be a great investor.
Perfect is the enemy of ‘good’, that is the more common expression. That wisdom is often applied to so many areas of life. I’ve stretched good to great. With so many wonderful low fee investment options available it’s not difficult at all to be great.
Where did that expression originate?
Here’s a wonderful article from Neil Patel, Your Secret Mental Weapon: Don’t Let The Perfect Be The Enemy Of The Good. Mr Patel suggests that the phrase has its roots and has been attributed to many philosophers and sages throughout the ages.
- Voltaire: “The best is the enemy of the good.”
- Confucius: “Better a diamond with a flaw than a pebble without.”
- Shakespeare: “Striving to better, oft we mar what’s well.”
Now Voltaire certainly didn’t have ETFs and indexing in mind when he offered that wisdom. But it’s incredible how universal truths can even keep up with the times and technology. Mr. Patel continues with …
- Rather than expecting aha moments, prepare yourself for gradual improvement.
- Rather than risking sudden leaps in ability, skill, or progress, expect marginal improvement over periods of time.
- Instead of waiting for a rush of exhilaration, expect modest satisfaction over time.
It’s uncanny how those insights apply to investing. Successful investing happens in slow motion, and to borrow from our friends at Mawer, it’s really boring.
It’s easy to become a great investor.
What does it take to be a great investor? Hold a well diversified portfolio. Keep your fees as low as possible. Invest within your risk tolerance level. Be very consistent and add monies on a regular schedule. Ignore all of the noise. Get out of your own way.
As you may know, Warren Buffett is the most successful investor, well ever. Mr. Buffett also suggests that investors simply buy low cost ETFs that cover the broader stock markets.
Don’t suffer from investor paralysis.
Certainly it takes a basic understanding of what is investing to become a self directed investor. But it’s not that difficult to understand the basics. And if you have absolutely no interest in learning, no problem there either. You can have an investment firm invest for you at a very reasonable cost.
Canadians can find so many reasons to not invest, or to stop investing. Often, they are trying to make sure that they have everything right. But there is no perfect portfolio. It’s very difficult to create the perfect tax efficiency. Many investors will read opinions on what is the optimal mix of Canadian and US and International stocks. You won’t find THE answer.
Be well diversified and just do it.
This recent post asks why Canadians have given the Robo Advisor the cold shoulder? Josh Book of Parameter Insights offered a graphic that looked at investment barriers. Not having enough money was top of the list. Even though the respondents often indicated they had very generous salaries. If you’ve cleared your high interest debt and you have your emergency fund, it might be time to start investing. Start building that wealth. You don’t have to be rich to start the process of becoming rich. And I do believe that most of us can retire rich one day.
If you’re early in the investment journey and have a long way to go before you fill up your RRSP and TFSA space, does it matter if you put a little in the ‘wrong’ account type? There is no wrong. You might learn along the way and discover the more advantageous ratio of RRSP vs TFSA vs Taxable account levels.
Not perfect, but finding financial freedom.
In this recent post living off of the dividends and that 4% rule there was a measured debate in the comment section on the merits of dividends for retirement or the total return approach. But in the end most agreed – hey whatever works for you. All of the readers seem to pay attention to sensible diversification and they keep their fees low.
There was some lively debate on Twitter as well, I’m at 67Dodge.
In the comment section a reader posted …
Works for us although we understand there is some tax inefficiency in our large non registered account.
Beautiful. The investor/reader even knows that the portfolio is not the most tax efficient. But that has not stopped them from investing and building wealth. And you might notice the words ‘large non registered account’. Rikiki has filled the TFSA buckets and likely all or most of the RRSP bucket and has moved on to build that taxable account. Having some tax inefficiency is not a problem.
To each his or her own.
Rikiki mostly invests for income. That desire for income often drives the bus. Income might keep Rikiki and other investors focused on the long term goal of building wealth. You can argue that total return might be ‘better’. Some investors may argue that you should strive for optimal tax efficiency. Sure. But mostly you can talk to the hand. This investor that was not perfect appears to be sitting pretty.
How to get ‘more great.’
If you’re a self directed investor keep learning, keep reading, keep watching. And certainly you should strive for greater tax efficiency. You should learn as best you can how to prepare your portfolios for retirement. And then, you’ll learn how to create retirement income in a very efficient manner. Most will be well served to contact an advice-only planner. There can be great value in that advice.
If you don’t know what you’re doing – do this.
If you have no interest in investing consider one of the Canadian Robo Advisors. You’ll get access to human and digital advice and access to common sense lower fee portfolios that are managed for you. I’ve also suggested that the Robo’s are a great training ground. As you invest you might continue to watch and learn. One day you might make the move to manage your own portfolio.
Hit that Robo Advisors/Funds tab for reviews.
But mostly, just do it. I am happy to help with any questions or in that education process. You’ll find the categories for posts on the right hand side. The site search engine works very well. Send questions via that contact form.
You don’t have to be the perfect investor; it’s OK to be great.
Happy imperfect investing.
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