Good Enough Investing

“How are you?”

“I’m fine, thanks. How about you?”

“Well, good enough, I’d say.”

Good enough…?!

On closer inspection, what sounds like a boring and unpleasant description of one’s own state of mind is an expression of deep insight and satisfaction with life.

Those who free themselves from the shame of not being the best, most perfect person at the maximum of their life’s possibilities get rid of the pain of always chasing after an ideal that can hardly be achieved.

It is the same with investing.

The search for the perfect investment – a frustrating endeavor

The world of investment is like a labyrinth with an integrated obstacle course.

We are bombarded with countless strategies, analyses, and forecasts that confuse us and fuel our doubts.

Which path leads to the desired goals of financial freedom and independence? In which shadow of the next megatrend is the next ten-bagger lurking? Finding a path and staying true to it is not easy in the confusion.

I have found something that works very well for me. I practice “good enough investing”.

The average private investor takes a different approach. Motivated by greed and the hope of quick fortune, many private investors plunge into the investment world. But reality quickly catches up with them: The market beats them again and again.

“I can beat the market!”

The naive assumption that you can beat the market in the long term is the first step on the road to failure. Driven by ego and the desire to be better than the masses, private investors ignore the simplest laws.

Is value investing dead?
A lovely image, which I have found here

Countless blogs, forums, and YouTube channels preach supposedly surefire strategies.

Driven by seemingly infallible tips from these honey pots of deceptive temptation, retail investors believe they are already on their way to becoming the next financial genius.

Unfortunately, greed and a lack of expertise make these investors susceptible to promises of salvation.

Always remember: fear and greed are the arch-enemies of successful investing and we are all part of some sort of bullshit bubble.

And then,  driven by emotions, private investors usually make the wrong decisions. They sell in panic when prices fall and buy euphorically when prices are high.

The sad reality

The sad reality is that private investors continually underperform. How could they possibly have more talent, knowledge or a more sophisticated truffle nose than other investors?

The sad performance of retail investors: 20-year annualized returns by asset class (2001-2020)
The sad performance of retail investors: 20-year annualized returns by asset class (2001-2020)

Private investors generally do not have decades of experience.

They are often rookies dreaming of quick money.

Opposite them are institutions worth billions, with huge resources and a broad network with direct contacts to the centers of power. It is almost impossible to consistently beat them in terms of knowledge and speed.

In addition, studies show that successful market timing is a matter of luck. It is the same as in casinos. Most “lucky streaks” end in bitter losses.

Good enough investing 

I practice a different approach, which I would call good enough investing.

good enough investing – the philosophy behind it

The core of “good enough investing” is simple:

I like picking stocks while acknowledging that I would probably get better returns with an ETF. So instead of doggedly pursuing maximum returns, good enough investing focuses on a simple, stress-free investment strategy that meets my needs and goals.

My goals are rather humble. I want to do more right than wrong and to generate an income from dividends.

Diversification, a long-term focus, and regular investing are the pillars of my strategy to achieve my financial goals.

The benefits of good enough investing – goodbye stress, increased satisfaction

Good enough investing is about being satisfied with what is “good enough” instead of constantly comparing yourself with others or having unrealistic expectations. Not achieving the most perfect result is part of the strategy. It is not synonymous with failure.

The search for the perfect investment is passé. Good enough investing liberates and enables relaxed investing without constant worries and doubts. Overall, the approach leads to a deep satisfaction with my investment strategy. I have no unrealistic expectations of the market.

My good enough investing strategy – simple but effective

Regardless of the market situation, I continuously invest a fixed amount. This ensures discipline and consistency. In addition, this automatically increases the monthly cash flow through dividends.

After more than seven years of generating this income stream, I can tell you that it is enormously motivating when the passive income increases yearly through dividends.

The Mistakes I Made - A Reflection
I made a lot of mistakes

But I also made many mistakes, leading to my underperformance in the market in some years.

Instead of thinking about selling bad performers, I invested more and more capital in the poorly performing stocks. Often, I was particularly blinded by the high dividend yields.

But I learned from these mistakes

While investing more money to lower the purchase price seems tempting, it is still gross nonsense. There is no shortcut.

The return on initially invested money will still be negative. I cannot reduce losses on invested capital by averaging down. This is not true. At most, I can hide them.

Time To Reflect The Investment Strategy - How To Improve The Performance
It is always a good time to reflect the investment strategy to improve the performance

Early on, I made many more key investment mistakes. While focusing on factors like P/E ratios and dividend yields, I placed too much emphasis on them and overlooked growth potential.

This resulted in a portfolio with too much exposure to cheap, high-dividend stocks that lacked significant business and dividend growth.

Despite these initial stumbles, I’ve maintained a core investment strategy since 2017, with ongoing refinements.

This consistency has helped me avoid drastic portfolio overhauls, but I recognize the need for ongoing adjustments to adapt to market changes or acknowledgement of mistakes I made.

I am making progress with this good enough investing approach

It’s becoming easier and easier for me to stand by my strategy confidently. One reason is certainly that I have gradually built up quite a respectable cash flow, which I could already use to offset a substantial part of my monthly expenses.

I Increased My Dividend Income Tenfold In Six years To Almost $7,000 Per Year
The dividend tsunami is rolling 

I am currently focusing on sharpening the concentration of my portfolio. As part of this little adjustment, I have sold more than ten non-core companies.

In addition, I now only invest capital in shares that substantially increase their dividends yearly.

In return, I also accept lower dividend yields. A few years ago, I would not have touched companies with an initial yield of 1.5 percent and a P/E ratio of 25 or more.

Today it’s different. Will it perfect my performance, and will I beat the S&P 500 yearly? I don’t know.

Is it good what I’m doing?

Well, at least for me, it is good enough.


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