Perfect Timing Isn’t Real

The Importance of Investing Wisely in an Imperfect World

One of the biggest challenges for investors working toward a secure retirement is the temptation to aim for perfection. At first, this concept might seem counterintuitive. We grow up hearing that “practice makes perfect,” and it’s often reinforced that we should always be pushing to reach an ideal standard. However, in the world of investing, pursuing perfection often leads to inaction, which can delay progress toward your financial goals. Waiting for the perfect set of circumstances—a moment that rarely, if ever, arrives—tends to hold people back from the important, actionable steps that set up a stable financial future.

Below, we’ll explore some common pitfalls investors encounter when they’re focused on trying to achieve perfection. Recognizing and avoiding these traps can help you make more confident, effective financial decisions.

1. Waiting for the "Perfect" Time to Invest

Having cash reserves for emergencies is crucial—three to six months' worth of expenses in liquid savings is typically a good rule of thumb. However, holding onto much more cash in hopes of timing the “perfect” market entry can be costly. It’s easy to put off investing until things feel stable, but in reality, there’s always some factor—whether it's political, economic, or global—that creates market uncertainty. Waiting for that ideal moment often leads to prolonged periods of sitting on the sidelines, missing out on valuable time in the market and the compounding interest that comes with it.

Today’s environment adds a layer of complexity, as cash yields are currently at multi-year highs, tempting investors to sit things out. However, while cash and money market funds may offer comfort in the short term, they won’t keep up with inflation over time. Holding too much cash may feel like a safe choice, but it’s a decision that risks eroding your buying power.

2. Searching for the "Perfect" Investment

It’s natural to want an investment that provides high returns with little risk. But in investing, risk and reward go hand in hand. Chasing the elusive “perfect” investment is often an exercise in frustration. High returns typically require a willingness to take on a higher level of risk, which can include liquidity constraints, potential defaults, or leverage.

Instead of seeking a flawless investment opportunity, it’s more practical to focus on a strategy that aligns with your long-term goals. This generally involves diversifying your assets across different asset classes, balancing risk, and building a portfolio designed to withstand fluctuations.

3. Trying to Buy at the Best Price

Everyone loves a good deal, and it’s common for investors to want to buy at a “perfect” price. But waiting for a specific market level to jump in is often a recipe for indefinite delays. If you’ve developed a solid investment strategy, it’s better to start moving forward rather than waiting for prices to hit a certain threshold. Often, the best time to invest is simply when you’re ready.

4. Constructing the "Perfect" Portfolio

There are countless ways to build a portfolio, and even two investors with similar goals, risk tolerance, and time horizons might receive very different portfolio recommendations from different advisors. The truth is, there isn’t one “perfect” portfolio, just plenty of approaches that can work, as long as they’re built around principles like diversification, liquidity, and a mix of stocks, bonds, and cash.

The real missteps occur when portfolios are overly concentrated, lack liquidity, or rely on overly complex strategies that are difficult to maintain. For most investors, the key to a functional portfolio is to cover these basics, not to pursue an ideal configuration.

5. Delaying Savings Until Life Is “Ideal”

Many young professionals feel they should hold off on saving or investing until they reach a certain milestone—higher income, fewer expenses, or less debt. However, the best time to start saving is as soon as possible, even if cash flow is tight. Early contributions, even if modest, take advantage of compounding over time and create a strong foundation for future growth.

6. Refusing to Act Due to Tax Concerns

Tax considerations are essential in any financial plan, but some investors let tax concerns paralyze them, delaying action in hopes of avoiding a tax bill. While no one enjoys the thought of triggering tax obligations, delaying adjustments to avoid them can cause you to take on risks that may end up being more costly.

Underperforming investments, overexposure to a single stock, or a misaligned allocation are just some of the risks investors face when they delay action for tax reasons. A balanced approach is to look at the bigger picture and recognize that taxes are a natural part of investing—they should be managed, but not dictate all decisions.

The Bottom Line: Start Moving Toward Progress, Not Perfection

When it comes to investing, the hardest part for many is simply getting started. Waiting for a more “perfect” scenario usually only leads to missed opportunities. Take time to speak with a financial advisor to find what strategy works for you and your financial goals. The best part is your strategy can evolve with you.

Perfection isn’t attainable in the investment world, and it’s progress that matters most. Taking steps forward—even if they’re imperfect—will move you closer to your financial goals.

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At Colmina, we are dedicated to building a community centered around the well-being of those we care for. Our commitment to fiduciary advice ensures our decision-making is always in the best interest of our clients. No matter the twists and turns of the financial market, our advice will adapt to match so that your plans can stay true to the course. 

Colmina strives to earn and maintain the trust of our clients. We are dedicated to crafting customized plans and personalized portfolios that are tailored to meet your goals.