Why ‘perfect’ doesn’t exist in investment, but progress does

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How do I overcome analysis paralysis? I have been trying to get myself to start investing for a while, and I am financially ready to invest. I have a good income, no debt, I’m good at saving and have money in the bank. Somehow, I can’t get myself to pull the trigger. I can’t shake the feeling that there’s something I don’t know, and I need to research more.

This can be a frustrating experience to live through.

You might find yourself wondering why you can’t get out of your own way. Why can’t you take action? You know what you ‘should’ be doing, you even figured out how to do it. So, what’s stopping you?

Diving into the world of investing can be daunting, but there’s no need to be a perfectionist.Credit: Simon Letch

In my experience working with people in this situation, usually, elements of unhealthy perfectionism are under the surface of this problem.

There is a need to have things be absolutely correct and right, and a fear of making mistakes or not having things be perfectly optimised.

This drives the need to research more and more, to make plans and spreadsheets and be across every small detail. This drives the exhausting, never-ending pursuit of perfection.

All of this fuels the belief that you can’t act until you’ve figured it all out. So, how do you combat this? I have a few suggestions.

1) Come up with personal decision-making criteria. The problem many people have when they start investing is option overload. There are so many options, and it would take a lifetime to research them all.

What often helps people get started is having a broad set of criteria to start narrowing down their field of research and options.

For example, if I know I’m looking for high-growth investments to be held for the long term, I can quickly eliminate options that don’t fit my criteria.

Now, I’m not trying to research all the options out there, I’m only going to be researching the options that are suitable for the criteria that I have chosen. I can ignore everything else.

Perfect doesn’t exist, but progress does. Don’t aim to get it perfect, aim to get a little better every day.

2) Identify the levers that drive real impact. Most of the things we agonise over often have little impact in the grand scheme of things, especially compared to the cost of all the agonising we do.

The difference between an investment with a 0.05 per cent fee and a 0.04 per cent fee is not going to make or break your financial life as much as procrastinating on that decision for months or years will.

Switching banks every six months to get a 0.05 per cent higher interest rate on your savings is not going to make as big of a difference, compared to putting that same time into increasing your income.

So, step back and take a look at what will make the most significant difference to your financial life?

That should include things like increasing your savings rate, the overall asset allocation of your portfolio, your ability to invest consistently and regularly, increasing your income, and so on.

Those things have such an impact that you’ll usually end up far better off getting all the big things right than you would obsessing over small things. In fact, obsessing over the small stuff is likely to cost you time, effort and money that could be better spent on big-picture things.

3) Know that there’s no such thing as “perfect”. It’s an illusion. There’s no such thing as a perfect investment portfolio, or a perfect budget, or a perfect savings system, or a perfect investment.

You have to let go of the idea that you’ll “get it right” in the first instance, or that you’ll have a “perfectly designed portfolio” from day one, or you’ll somehow avoid making any mistakes ever.

There is not a single person out there who is financially perfect. Even the most respected investors get it wrong, make mistakes, and have areas they are beginners in.

In fact, that’s a necessary part of the learning journey. Learning cannot be entirely theoretical, experience is important, and you can only gain that experience by acting.

So, here are some measures that are better than “perfect”, because they actually exist:

• Does it work? Importantly, does it work for you?
• Is it aligned with your personal goals and values?
• Is it a reasonably well-informed decision?
• Is the potential value of delaying action to get more information greater than the potential value of acting on this decision now?
• Does this decision help you move forward?

The last one is important because a potent antidote to perfectionism is progress. Perfect doesn’t exist, but progress does. Don’t aim to get it perfect, aim to get a little better every day.

Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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